How to calculate a price for the Pyra

[_jr_]

Unfortunately haggling will get us nowhere. There is little doubt given his track record that ED (as far as we know he still hasn't recouped his Pandora investment) will set the lowest retail price he can afford. Whether you can justify that or not doesn't change anything. Personally I expect it to be well above 500€.


One thing you could do is organizing larger production runs. You could consult with ED whether e.g. 10,000 or 100,000 preorders are needed to push the retail price below 400€. Then you just have to find that many customers willing to pay 400€ upfront (possibly using kickstarter). I could imagine this to actually work after the first production runs have proven the design.

 

[Natsu]

Kickstarter is more popular, but Indiegogo seems like a safer bet. Also, with a lot of KS I seen, they have a paypal on the side.

 

[SoniX]

I know its not an up2date price. We will see how much it will cost. I also know it will be cheaper the more people buy it. 

But its about the principle. 

Why should we/I pay 100 Euros (thats 20%!) more, just because resellers want to make money with the Pyra. Im not willing to pay more because they want to make money. 

The Pandora did cost 330euros at the time I purchased it, and because I wanted to support Ed (Evildragon) I paid 100 Euros more. I knew that Ed needed the money and I think It was worth it. 

But not thinkgeeks. Thinkgeeks makes enough money and they didnt do anything so far to help with the pyra. They just will make money. And this I dont want to support. 

So, I have no problems with the price of the pyra, I have no problems with Ed and his calculation and I dont have problems if Ed makes money with the Pyra. I will pay for that all. 

But not for resellers. 

 

[WizardStan]

Why should we/I pay 100 Euros (thats 20%!) more, just because resellers want to make money with the Pyra.

Because that's how the world works? Literally? Like, everything you buy is marked up. Everything. There isn't a single brand new product that you have ever given money for that wasn't marked up. It cannot be any different. 20% is actually pretty low, sometimes items are marked up hundreds of percent, because the demand exists and the market decides it is worth the price.
But to be clear, I'm 99% certain that the price will be universal: if it ends up costing 500EUR that will be the price ED charges as well as ThinkGeek, which means EvilDragon will be making higher profit from his own sales then from resellers but he will almost certainly sell way more via resellers than he ever could at his own shop so it balances out. And I'm also quite certain that even at 600EUR it'll sell well; there'll be a lot of complaints about the price but there's not much that can be done about it, it is what it is.

 

[cinaeco]

And I really want to get one.

In that case, you should start a good saving campaign right now! You can do it! Give up eating out or something and start setting aside the funds (mine are ready!). The machine we'd get will be more than worth the 500-700-whateverEUR we spend on it now, over the years we'd get to use it.

 

[SoniX]

But to be clear, I'm 99% certain that the price will be universal: if it ends up costing 500EUR that will be the price ED charges as well as ThinkGeek, which means EvilDragon will be making higher profit from his own sales then from resellers but he will almost certainly sell way more via resellers than he ever could at his own shop so it balances out. And I'm also quite certain that even at 600EUR it'll sell well; there'll be a lot of complaints about the price but there's not much that can be done about it, it is what it is.

No. Read the first post in this Thread of Ed. You missunderstood. 

The price of all parts and completion the pyra including all other costs (shop, website etc) and including 15% for Ed will be 402 Euro. 

And then comes the big part of 25% (my 20% were false) extra because of the resellers. Because they want to make money and Ed dont want to sell under their price because that they are not angry about Ed. Because they want to make money! 

And thats the point. 

We have to pay 25% more because of such f*cking resellers. 

Thats not because Ed wants to make money. That he already calculated with the 402 Euros! And thats absolutely no problem! 

But why pay 25% more just because of the resellers? No way I will pay that much more! 

If Ed needs money thats another story. At buying the pandora I also gave 100 Euro more. But that was my free choice. 

But I will never pay 100 Euro more because Thinkgeek and Co want to make money and will be angry about Ed if he sells the Pyra under their price. Thats should not our Problem! 

 

[SoniX]

And I really want to get one.

In that case, you should start a good saving campaign right now! You can do it! Give up eating out or something and start setting aside the funds (mine are ready!). The machine we'd get will be more than worth the 500-700-whateverEUR we spend on it now, over the years we'd get to use it.

So, then send me 100 Euro if you have enough. No? I knew that. 

And I also dont want to pay 100 Euro extra just because that Thinkgeek is not angry about Ed because he sells the Pyra under their price. 

The now calculated price is about 402 Euros. Including 15% for Ed. Thats ok! Will pay that with a smile. And I'll bake Ed a pie because I like him. 

 

[bzar]

Do you think resellers will stock Pyra if the amount of profit they'll make of it is (volume discount ED gives them) + (price difference to DragonBox price)? To make a sensible profit they'd have to either get a HUGE discount from ED (cutting into his profit margin) or sell it for a lot more. Neither sounds like a viable business plan. The problem here is that ED is both a wholesale supplier and retailer. Usually you don't see this markup because you only see retail prices.

If ED only sold pyra through non-dragonbox retailers the price would be the same. Now you just have the option to buy from ED as well as the other retailers. Basically what you want is a discount because you're buying straight from the wholesale supplier. Giving that to everyone just doesn't work if retailers are involved, especially for web stores.

Could you provide an example of a item producer selling said item for a significantly smaller price than retailers that keep it in regular stock?

 

[Caine]

The price of all parts and completion the pyra including all other costs (shop, website etc) and including 15% for Ed will be 402 Euro. 

And then comes the big part of 25% (my 20% were false) extra because of the resellers. Because they want to make money and Ed dont want to sell under their price because that they are not angry about Ed. Because they want to make money!

Profit margins of 40% are not unusual at all. Look at it this way, ED takes a profit margin of +/- 40% and when you purchase at a reseller then he has to take a cut of half his profit margin in order to use their distribution services. Everybody needs to eat, the longer the chain the more you spend funding profit margins for middle-men.
If you don't want to pay this price then don't buy a Pyra.

 

[rygD]

I understand the frustration of paying more due to resellers, however I am not convinced the price would actually be lower (edit) with without them.  It has been a while since I read this thread, so I may be completely wrong about that.

There are several very big benefits to having resellers, especially one like ThinkGeek.  First is that my Pyra would be less likely to be damaged or stuck in customs if it comes from a domestic reseller.  I also won't have to pay as much for shipping (I haven't checked shipping costs from ED's shop lately, but in the past it was a fairly significant extra cost that limited what I could add on).  The big one for ThinkGeek is the customer base and exposure they offer.  There are many products I discovered first due to ThinkGeek, and some of the ones I purchased from them were pretty pricey.  I understand some people may not feel it is worth it, but those extra sales and awareness of the Pyra can help ensure that future Pyra related products (dock, CPU board upgrades) are more likely to happen.  The side benefit is that sales from dragonbox have a much higher profit that can be used toward manufacturing and other products that may be of interest to us (again, the dock and CPU board).  If you want to look at where the money is going, consider ThinkGeek an advertising campaign with a few extra little benefits for ThinkGeek customers.  This also builds up the community.  I don't know if they would sell more units than ED, but I doubt he would be considering it if it was going to hurt his profits too much.

Rather than using his explanation, cost breakdown, and honesty to fuel your outrage, thank him for sharing with us.  He could have simply stated the price and never explained why.  Would you then refuse to buy it because it was 500 Euros instead of 402?  How would you know there was a markup of that magnitude?

Edit:  Don't be surprised if the price is higher due to currency exchange rates and all that other stuff I barely have a basic understanding of.

 

[rygD]

The price of all parts and completion the pyra including all other costs (shop, website etc) and including 15% for Ed will be 402 Euro. 


And then comes the big part of 25% (my 20% were false) extra because of the resellers. Because they want to make money and Ed dont want to sell under their price because that they are not angry about Ed. Because they want to make money!

Profit margins of 40% are not unusual at all. Look at it this way, ED takes a profit margin of +/- 40% and when you purchase at a reseller then he has to take a cut of half his profit margin in order to use their distribution services. Everybody needs to eat, the longer the chain the more you spend funding profit margins for middle-men.

If you don't want to pay this price then don't buy a Pyra.

These are also some great points.  It would be a shame if the decision to have it manufactured fairly (and with higher quality) by using European companies just to turn around and say to resellers "you don't get to make any profit off of this product, and may not even be able to cover your costs for stocking it".

 

[SoniX]

The price of all parts and completion the pyra including all other costs (shop, website etc) and including 15% for Ed will be 402 Euro. 


And then comes the big part of 25% (my 20% were false) extra because of the resellers. Because they want to make money and Ed dont want to sell under their price because that they are not angry about Ed. Because they want to make money!

Profit margins of 40% are not unusual at all. Look at it this way, ED takes a profit margin of +/- 40% and when you purchase at a reseller then he has to take a cut of half his profit margin in order to use their distribution services. Everybody needs to eat, the longer the chain the more you spend funding profit margins for middle-men.

If you don't want to pay this price then don't buy a Pyra.

So, if Ed makes less money with resellers, why the hell he wants to use them? Nobody needs them. The Pandora also didnt have resellers and the people bought it. 

Just a thought:

If Eds choice is to use resellers and sell them the Pyra for 402, and the resellers sell them for 500.... 

Then I make my own reseller shop. I buy cheap Pyras for 402 Euros and sell them cheap for for example 420 Euros. 

They all would loose. Thinkgeek and Co cant sell them for 500 and Ed also cant sell for 500. 

Nobody would stop me if I want to resell Pyras. I would not make anything illegal. 

But is that what you all want? 

Im wholesaler of professional and I know about the prices between manufacture and customer. I also understand Eds thinking. He wants to sell as much as possible and because of that he needs resellers. 

But I dont think its the right way. Ed will become less money; we have to pay more money and for the prominence of the Pyra it doesnt help. 

Ed should sell for himself without resellers. He could take a bigger marge; instead 15% just say 30%. It would be cheaper for us and bring more money for him. 

A Pyra will never be a Nintendo DS; its a special product for a special market. 

Thinkgeek is a bunch of useless items for unusual expensive prices. The Pyra doesnt fit there. 

And stop with "All other products use resellers blabla". The Pyra is not all other products. 

 

[SoniX]

Thats not our problem!! 

If they cant sell for the price then they should not sell the Pyra! Nobody said they must sell the Pyra! 

Read my text above of this. 

Nobody would stop me to make my own reseller store. But then I could make prices so cheap that Thinkgeek also cant sell it... 

 

[Caine]

Nobody would stop me to make my own reseller store. But then I could make prices so cheap that Thinkgeek also cant sell it...

ED could stop selling to you for undermining "the market".
Anyway, please do. Start your own reseller store. Let's see how this works out...

 

[TrashyMG]

So, if Ed makes less money with resellers, why the hell he wants to use them? 

Mostly to expose the product to people that would normally not know of the forum and such. 

 The Pandora also didnt have resellers and the people bought it. 

Actually the Pandora did have resellers had iThic.com (Link) is the North America's reseller and the shop Ekianjo ran in Japan.  

 

[WizardStan]

No. Read the first post in this Thread of Ed. You missunderstood

I misunderstood why you were getting upset. Now I understand, but I completely disagree.

We have to pay 25% more because of such f*cking resellers.

Including 15% for Ed. Thats ok!

I'm ok with EvilDragon making more money regardless of why. His original 15% markup was terribly low, he's a saint for not wanting to make that much money but he is absolutely entiteled to more. 43% is much better.

No way I will pay that much more!

So don't. You don't need to buy a Pyra. There will be enough people, especially if it gets onto ThinkGeek, to replace you.

Thats should not our Problem!

Well, not "our" problem, but certainly ED's problem. He can get massive exposure by selling via ThinkGeek, and will probably sell several times more without needing to expand his own operating costs, more than enough to balance out the meagre 15% he'd be making on each sale. It is entirely in his best interest to sell on ThinkGeek and other resellers, therefore if they are upset with his practices and lose interest because of price then it is his problem.

Then I make my own reseller shop. I buy cheap Pyras for 402 Euros and sell them cheap for for example 420 Euros.

They all would loose. Thinkgeek and Co cant sell them for 500 and Ed also cant sell for 500.

Nobody would stop me if I want to resell Pyras. I would not make anything illegal.

But is that what you all want?

I want, I very very much want to see you try. Do it. Go ahead. It would be pretty epic.

Actually the Pandora did have resellers had iThic.com (Link) is the North America's reseller and the shop Ekianjo ran in Japan.

Which were in the exact same situation, selling at (relatively) the exact same price, receiving a reseller's discount so ED made less profit per unit but sold more into markets he otherwise couldn't.

 

[fusion_power]

Normaly, resellers help to spread a product and this leads to more sells in general. However, I doubt this will work in case of the Pyra because it's only a niche series product, small quantity, slow production  and always hard to get more parts like we learned fom the Pandora. So even if the demand is high, I doubt that enough units could be made due long lead times and limited manufacturing capabilities. "Mass production" that make stuff cheaper just seems to not work in out case. Except you go to China.

So a direct selling without many resellers in between is by far the best option. To drop the price and like ED suggested, the first Pyras may come with lmited features like no 5GHz and optional 3/4G Module.

 

[rygD]

SoniX, isn't refusing to purchase a Pyra on principle if ED uses resellers and raises prices, more damaging to him and the community than buying it and showing support?  I don't think it will really matter, though, as I am pretty sure the one sale lost to you would be more than made up by others that buy from resellers, especially those with a large customer base like ThinkGeek.  

Is this similar to when people review stuff in Google Play and give it a 1 star rating with a review saying "add feature X and I will give it 5 stars" even though they already like it and use it?

Edit:  WizardStan beat me to the first paragraph.

 

[bzar]

Ed should sell for himself without resellers. He could take a bigger marge; instead 15% just say 30%. It would be cheaper for us and bring more money for him.

So think about it this way: ED takes 40% or whatever profit and gives 25% volume discount for resellers. If he had never mentioned resellers and just put up a 40% margin, would it had sounded better?

 

[Neelix]

Just a thought: If Eds choice is to use resellers and sell them the Pyra for 402, and the resellers sell them for 500.... Then I make my own reseller shop. I buy cheap Pyras for 402 Euros and sell them cheap for for example 420 Euros. They all would loose. Thinkgeek and Co cant sell them for 500 and Ed also cant sell for 500. Nobody would stop me if I want to resell Pyras. I would not make anything illegal. But is that what you all want?

Just a thought, but If I was selling something at retail prices to the public and also to resellers at a discounted rate, I would make it part of the agreement that the reseller has to agree to to become a reseller not to undercut me...

-Neelix