How to calculate a price for the Pyra

[Linux-SWAT]

+1

 

[fusion_power]

I'm sure the prices of the Pyra will be "fair" around the world. I mean, different prices from reseller to reseller or to the original seller are common from country to country. I always check international and local prices and I'm always pissed that for example electronics are often much much more expensive here in germany (and europe) than in the USA for example. Same for Video games, even on global platforms like Steam. And no, "taxes" or "different curency" just doesn't explain it. (I do calculate the Rate of exchange in of course). The exact same Laptop I was searching for example is ~300$ cheaper in the US than in germany -WTF!

So do I want the best prices everywhere? Yes. Do I get these? No. We just have to deal with that I guess.

 

[EvilDragon]

And no, "taxes" or "different curency" just doesn't explain it. (I do calculate the Rate of exchange in of course). The exact same Laptop I was searching for example is ~300$ cheaper in the US than in germany -WTF!

Actually, often it does.

For example, let's assume there's an electronic product for 200 USD available in US (end user price).

As a reseller, I might be able to buy it for 150 USD.

150 USD is about 140 - 145 EUR right now (you always have to pay an exchange fee on top of the exchange rate).

Shipping can be VERY expensive. For example, shipping 100 GCW Zeros to me is about 600 USD shipping costs. So about 5 EUR shipping costs on top of it.

Then we are already at about 150 EUR I have to pay just to get the product to my place.

Then there's WEEE registration, which is 500 EUR per product. Let's assume I order 100 products, then it's another 5 EUR per product.

That adds up to 155 EUR.

The product also needs to have CE. If I have to do it myself, a test is about 2000 EUR. That would be 20 EUR per product. Often (with huge products), the manufacturer has done that. He still has to do that additionally, so he WILL increase his price a bit compared to the reseller price in US.

So let's assume this is 5 EUR, which would add up to 160 EUR.

A product sold in Germany HAS to have a German manual included! So it needs to be translated - this also is often done by the manufacturer, but he'll probably also add that to the price. Let's assume it's 2 EUR, so we'd be at 162 EUR.

162 EUR. Then you, as a reseller, need to make some profit as well.

Thanks to our social system, loans are a LOT higher than in the US, the profit per product needs to be a lot higher as well.

Usually, you calculate with at least 20 - 25% profit.

Let's use 20%. That would be 195 EUR then.

Add 19% VAT on top, and we'd have 232 EUR.

So yeah, 232 EUR for a product that costs 200 USD in the US. The profit for the reseller would probably be about the same.

Oh, and if the reseller wants to sell via Amazon, add another 15%, as that's what amazon takes as margin...

The reason for the high prices in Germany are mainly because of increased fixed costs (rental, social system, etc.) as well as other bureaucratic stuff.

 

[fusion_power]

But that doesn't explain why EU products sometimes are still cheaper in the US, ignoring all the shipping etc. hell, it's even sometimes cheaper to re-import (german) cars from the USA that were former exported to the US. And there, imported cars are compared cheaper than here. Maybe the automobile industry has their own tricks but you must admit that the system is somehow weird and not equal fair.

 

[LEOXD]

Well, if you can explain fundamental physics (higgs bosons 'n' stuff) by using economics, you probably can also explain economics by using fundamental physics. 

https://www.youtube.com/embed/RznZ_e6aDHc?feature=oembed

 

[Alperoot]

I never seen anybody THAT angry before


Pyra price is a serious offense

 

[hns]

But that doesn't explain why EU products sometimes are still cheaper in the US, ignoring all the shipping etc. hell, it's even sometimes cheaper to re-import (german) cars from the USA that were former exported to the US. And there, imported cars are compared cheaper than here. Maybe the automobile industry has their own tricks but you must admit that the system is somehow weird and not equal fair.

There are exceptions to the general rule. Some hints to think about:* cars for the US market may have been produced directly in the US at different labour and raw material cost (i.e. they look the same as the EU car but were not exported before)

* there may be rebates by the manufacturer to get rid of over-stock in some regions

* manufacturer/brand may "buy" market share to stay competitive (which means the manufacturer will sell too cheap and loose money instead of withdrawing the product completely from the US market)

* government may (indirectly) subsidize certain business activities for general economic reasons (e.g. reduce unemployment rate).

So someone is voluntarily loosing money in such cases - to get it back through other means (e.g. by having higher prices elsewhere or through earnings from other products).

But all these business management tricks are not available for a new product, produced in a single factory by a small company. Like the Pyra is.

 

[PureWicked]

ED, you really shouldn't have to go through so much effort to school a potential reseller, (likely the type to be a potential problem later)

you set the retail price, give potential resellers some margin to play with,

as long as the price they set is acceptable in their market they sell them, if not the customers will buy from you or the other resellers.

That is the free market, the manufacturer takes the biggest risk up front and should make the biggest profit, you have your online store, so you are in effect your own customer, and you know that in order to sell the units and not piss off resellers that have faith in your product that you shouldn't undercut them at retail, every once in a while though situations change and stores have a SALE! but usually that means that things slow down for other stores for a bit, stock runs out at the SALE store and things normalise again..

my curiosity is, what world regions have potential resellers contacted you from ? 

 

[fusion_power]

But all these business management tricks are not available for a new product, produced in a single factory by a small company. Like the Pyra is.

Yes, and this is actualy good. I prefer "fair" projects ("fairphone" etc...). I'm sure ED will sell the Pyra to a fair price, no matter where. I will not join the reseller pro/contra discussion since I see not much sense there and I would so or so buy from ED directly (I'm from germany so no surprise ).

 

[Zink]

Yes, and this is actualy good. I prefer "fair" projects ("fairphone" etc...).

There is Fairfax in US, if you're interested

I am too somewhat bothered by the forecasted price of the Pyra. I wish it would be not higher than of the Pandora in the time I was buying it. But reality does not always match our wishes, and everyone has to make their living. I like the project very much and I hope I will be able to afford it when it finally comes out.

 

[xandros]

I'll definitely make sure I have enough saved up to get a Pyra when the first batch comes out. My main issue would be ordering them before they're all sold out. 

 

[SoniX]

Hello Ed, 

Don't you see that THAT IS EXACTLY the point? If Company X sells the mobile phones without that additional margin, they CAN'T GIVE you 20% even if you order 5000. They would make a loss! If they sell the product for 20% over their production costs, they CANNOT give you a 20% discount whatever amount order, because they won't make any profit from it. So what they do is exactly this (with estimated numbers as example): Minimum Profit they want to make: Production Cost Price * 20% Margin for Resellers: Production Cost Price * 20% * 20% In this case, they can give you as a reseller 5%, 10% and anything up to 20% discount depending of the quantity you buy - and they would still get their set minimum profit of 20%. The problem is: As a reseller, you don't KNOW their production cost. You only know what they tell you as sales price. That's something you seem to ignore here.

Not because of you, but for ALL resellers. Every company has a MINIMUM CALCULATED PROFIT they need to make for their product. If they want to give a reseller up to 20% discount, they need to rise the price for 20% - because otherwise they will NOT be able to give those 20% discount while keeping their minimum set profit per product.

And to be able to give you %, he needs to rise the price upfront, otherwise he would be able to give you any discount. What YOU actually ask from me is: A Pyra will have an estimated price of 400 EUR. If a reseller buys 5000 from me, he'd have to pay 400 EUR per unit. If a customer buys one from me, he'd also have to pay 400 EUR per unit. Why? Simple - you claim I should NOT raise the price for the resellers, so I also cannot give a discount as I would lose my profit which cannot be afforded. How many resellers would do that, what do you think?

Two things that maybe will solve the discussion. 

First, sure as a reseller you have to calculate your own profit and you have to calculate the discount you can give later. 

But, you did not wrote it so. You wrote you will hold the price high to not annoy the resellers. And that makes no sense. 

Second, how much a reseller should buy that he will get a discount? 

I dont think that a reseller will buy 100 or more Pyras at once. Maybe he will buy 10 or maybe 20. But thats not the amount to give a noticeable discont. 

Its not clear for me how you want to calculate 1 Pyra vs 10 Pyras vs 100 Pyras vs X Pyras. 

Or will you sell Pyras cheaper just because you sell it to resellers even if the order is just 10 Pyras? 

The whole thing does not act thoughtfully. 

Sounds like a great idea to ruin a product.

Believe me, I dont want that! 

It was just a thought experiment. 

Just dont forget following: Many people will not buy the Pyra if its too expensive. Many people didnt buy the Pandora because it was too expensive and the Pandora was way cheaper that the Pyra. 

Sure, here in this thread there are many people who also will pay 600 or even 700 Euros for the Pyra, but outside... ? 

And last thing: You said you dont want to sell to other countrys because of batterie packs, high shipping prices, weee directive etc. 

What you will make if someone from ie spain wants a Pyra? Would you register the weee directive for one Pyra in spain? Or would you say "I dont sell to spain"?

I dont think you will find resellers in every country. 

How did the weee directive worked so far?

You also have other products in your shop. And you also sent me a cheap replacement batterie outside Germany.

Why it worked so seamless so far and now it wont? 

Greets

 

[SoniX]

unless you're a pretty stupid reseller?

DING DING DING, we have a winner!

ED, I don't know why you're bothering. SoniX is seriously suggesting that you sell to everyone for the exact same price: whether you buy 1 or 1000 you pay X and he doesn't want to hear about you "raising prices" because you want to make money. I'm getting irrationally angry about the stupidity again. I need to get out of here.

Sorry, you didnt get the point. 

There are a few things that would not work like desired. 

A reseller would not buy 1000 Pyras at once. 

Ed cant assemble 1000 Pyras within a acceptable timeframe. 

Ed would not find resellers for every country. 

And I said multiple times that Ed should earn money with the Pyra. He should geht rich with it! 

And last: If I would be a stupid reseller, how did I make profit the last 15 years? 

 

[EvilDragon]

If I sell the Pyra to end customers, I shouldn't have a way lower price than other resellers, otherwise, they simply will buy from me and I'd lose all resellers.


If I want resellers to be able to offer the same price as I do, they need to get a discount so they can do that even though they have expenses.


Therefore, the only proper solution is to keep the end customers price in my shop higher than it could be. Which is the same that every other manufacturer who also sells to end customers in the whole wide world do it.

 

[SoniX]

If I sell the Pyra to end customers, I shouldn't have a way lower price than other resellers, otherwise, they simply will buy from me and I'd lose all resellers. If I want resellers to be able to offer the same price as I do, they need to get a discount so they can do that even though they have expenses. Therefore, the only proper solution is to keep the end customers price in my shop higher than it could be. Which is the same that every other manufacturer who also sells to end customers in the whole wide world do it.

I understood what you wrote. Didnt you read my post? ;-) 

Again: If you calculate your price with the discount you later give, its okay! 

If you raise prices because of others its not! 

For example: A reseller buys just 5 Pyras; you cant give them a noticeable discount. The reseller will sell them for 550Euros. 

Will you also raise your prices to 550? This way it wont work. Thats what I want to explain you the whole time. 

You also tell me the whole thing again and again ;-) 

BUT I just had a thought! Read it and think about it. 

What do you say about a Gerneral Agency (Google translation for: Generalvertretung) for the countrys? 

That would maybe the solution! 

You now have the problem that you act as a endcustomerseller and a wholesaler. 

If you give some shops/resellers in some countrys the general sale rights for their country you dont have to think about the price anymore and you wont have problems anymore.  

You sell it for your price and they sell if for their price. If someone wants to buy a Pyra in Spain from you, you just say "Buy it from X in Spain". If someone from Germany askes in Spain they will say "Buy it from Ed in Germany". It does not matter then if one is cheaper than the other. You dont have to look at all others what they do with their prices. You sell them like you calculated it. 

We also have sales rights for our country and it workes like it should. 

What do you say about this? 

 

[EvilDragon]

What do you say about a Gerneral Agency (Google translation for: Generalvertretung) for the countrys? 

That would maybe the solution!

It would just lower my profit a lot and increase the price even more.

You now have the problem that you act as a endcustomerseller and a wholesaler.

Umm... I don't have that. You have a problem, no one else who posted here so far has a problem with that. 

If you give some shops/resellers in some countrys the general sale rights for their country you dont have to think about the price anymore and you wont have problems anymore.  

You sell it for your price and they sell if for their price. If someone wants to buy a Pyra in Spain from you, you just say "Buy it from X in Spain". If someone from Germany askes in Spain they will say "Buy it from Ed in Germany". It does not matter then if one is cheaper than the other. You dont have to look at all others what they do with their prices. You sell them like you calculated it. 

We also have sales rights for our country and it workes like it should. 

What do you say about this?

Not much, as it would lower my profit and increase the price of the Pyra.

The price calculation is a mixture of sales via my shop and sales via resellers.

I expect to sell at least half of the units via my shop, thus I also get the reseller profit here (which is needed as I need to get back the development costs as well).

If I sell ALL of them via resellers, I'd have less profit and need to increase the overall price to get these development costs back.

Is that what you want?

I'm not really sure what issues at all you have.

You don't want me to make a higher reseller price to be able to make it profitable for other resellers.

But you want me to NOT sell the units via my shop but only via resellers, thus making it less profitable for me but it won't lower the sales price at all.

Where is the use in that?

 

[WizardStan]

And last: If I would be a stupid reseller, how did I make profit the last 15 years?

Almost certainly because you bought at the wholesale price and sold at the MSRP, exactly like what ED is trying to do and what you are telling him he shouldn't. The fact that you don't even understand that that's what you're saying is what makes you stupid.

 

[Binky]

Here's my understanding of it:

(all numbers are hypothetical, of course):

• Making a Pyra costs €400
• Business overheads come to €50 per Pyra
• Shipping bulk Pyras internationally costs €25 per Pyra

If ED were the only seller,

He can sell them for a minimum of €450

Now suppose a reseller comes along:

• They have to buy Pyras (€450)
• They have to pay for bulk shipping. (+€25)
• They have to rent an office, pay various taxes, pay employees, etc (+€50)

They can sell for a minimum of €525

As a consumer, I will always choose the cheaper option. Since I can save myself €75 by buying directly from ED, the reseller will never sell anything!

The only way for this to work is if ED sells Pyras to consumers for €525 and to resellers for €450.

----

Spoiler

This thread reminds me a lot of this::

"If  you look at it this way, its a rabbit"

"No! Its a duck! definitely a duck! Not a rabbit, a duck!"

 

[Blimp]

Again: If you calculate your price with the discount you later give, its okay! If you raise prices because of others its not! For example: A reseller buys just 5 Pyras; you cant give them a noticeable discount. The reseller will sell them for 550Euros. Will you also raise your prices to 550? This way it wont work. Thats what I want to explain you the whole time.

No, it won't, lets try this ( A, E and X are fixed, while B, C And F may vary):

Pyra production cost = A

Resellers can buy the Pyra for, A + B + C = D (Where B is profit for ED and C cost for the reseller, in case of low volumes C might be higher but won't effect E)

Retail price = A + X = E where A + X > D (Where X is a margin Ed thinks is reasonable)

Price ED sells his Pyra's to customers = E

Now if one reseller wants to sell for E + F won't affect the price ED sells them for which is still E.

 

[SoniX]

Almost certainly because you bought at the wholesale price and sold at the MSRP, exactly like what ED is trying to do and what you are telling him he shouldn't. The fact that you don't even understand that that's what you're saying is what makes you stupid.

 

No, we dont sell for MSRP. We dont even have a MSRP. We calculate our prices at your own. 

If you would read my posts it would be easier. 

But thanks for the stupid. The fact that you dont understand what Im writing makes you stupid little Stan.