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.