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Cheapest/best way to manufacture 100 SMT PCBs?
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Re: Cheapest/best way to manufacture 100 SMT PCBs?

by bigmessowires on Wed Mar 12, 2014 1:48 pm

zenwebb wrote:I want to keep my retail price to around $25-$30, as I don't think anyone will want to pay more for how simple the board is. The parts total per board is $7.17, so I was hoping that even with PCB manufacturing and SMT assembly the total unit cost would be $15 or less.

From my experience, I'd say if you're manufacturing for $15 and selling retail for $25, doing the logistics all yourself in small volumes, then unfortunately it's a marginal business. From selling my product, I've been amazed at how much time and money is lost to unplanned things:

  • You need anti-static bags, bubble wrap, shipping boxes, mailing labels, tape, and other supplies. Estimate this at $1 per unit.
  • If the $15 hardware isn't tested, you'll need to test each one yourself. Call it 5 minutes per unit.
  • Maybe 10% of the hardware will fail testing, assuming the manufacturer didn't do any testing for you. So the cost of a good unit is actually 10% higher than the manufacturing cost.
  • Some fraction of orders will get lost in the mail, or people will want refunds, or something else will go wrong. Estimate 5% of orders will result in zero revenue for whatever reason.
  • Accepting orders, preparing a packing slip, bagging and boxing the product, and printing postage can take 10-15 minutes per unit.

So it's a $15 manufacturing cost + 10% defect rate + $1 shipping materials + 5% loss rate = $18.38 cost per unit. Paypal takes 2.9% of your $25 retail price (more for international sales) so you get $24.28, for a profit of $5.90. Each unit takes you 20 minutes of labor, so in an hour you can do three. Congratulations, you've invented a part-time job that pays you $17.70/hour! Not bad, but if you're the kind of person who can single-handedly design some electronic gizmo interesting enough for other people to want to buy, then you can probably find a job that pays significantly more than that. And there's a risk of being left with some unsold inventory from your production run, pushing your hourly profit below minimum wage, or negative.
Last edited by bigmessowires on Thu Mar 13, 2014 7:34 pm, edited 1 time in total.
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Re: Cheapest/best way to manufacture 100 SMT PCBs?

by lyndon on Thu Mar 13, 2014 5:18 pm

That is an excellent summary. It's only with experience that you learn where the hidden costs are and even then you get bitten sometimes.

I have a niche industrial item that sells for around $350 and it's just barely worth it at that price due to the small volume. The total Cost Of Goods Sold is high enough that I don't want to keep a lot of completed inventory on hand for the reasons BMOW mentioned. In addition, some of the materials have to be custom made by another specialty shop (couple weeks lead time and quantity discounts mean that it only makes sense to purchase parts for at least 10 units at a time) and there is a lot of labor that goes into assembling each box. On paper, it looks profitable enough to keep doing, but in reality I should have made the unit price north of $700 to account for all the hassle of building units and to make it worthwhile keeping more finished units on hand. My customers would probably still buy it at that price, if a bit grumpily.

I've been doing this stuff for what, 20 years now, and I still make dumb mistakes.

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