How to calculate a price for the Pyra

[SoniX]

Do what you need to do.    But think: WizardStan first called me an idiot.    I didnt not attack him before!

Just calling someone an idiot isn't what I was referring to, being generally disruptive and confrontational is.

Calling someone an idiot is nothing to complain? 

And if I say Ed hast debts at his bank thats something to complain? 

??? 

Just calling someone an idiot isn't what I was referring to, being generally disruptive and confrontational is.

I'll stop, sorry. I'm just pushing buttons at this point and that's not helping anything. Makes me feel better though.

Nice to hear. 

You know I only called you an idiot because you said it before? Its so. 

Now you stopped and also I will not say it again. 

Thank you. 

 

[TrashyMG]

Calling someone an idiot is nothing to complain?    And if I say Ed hast debts at his bank thats something to complain?    ???

Has nothing to do with that.

You're obsessive about "being right", most people can just say I think you are wrong and move on, not repetitively bring up the same points, getting confrontational with everyone.

 

[SoniX]

I understand.


I just wanted to help.


Forget it.


Pay what you want. For me its overpriced. Wont buy a Pyra and wont write anymore here.

 

[Urben]

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

You are the sender. Stan is the reciever.You want to transmit a information (your point).

1. To do that, you encode your thoughts into something which can be sent (words).

2. These words have to be sent via text to Stan.

3. Stan recieves the encrypted informations, and decrypts them to understand them (comprehension).

4. Stan then wants to give you a feedback by encrypting his thoughts (words).

5. These words are sent to you.

6. You recieve them and have to decrypt them yourself to understand these words (comprehension).

(simplyfied)

Six steps of communication. If somewhere something goes wrong (like bad choice of words, unfitting tone etc) the communication failed.

Assuming one (you) always does everything right and therefore the fault always must be with the other (Stan) can mean two things:

One: You dont understand how communication works and where it can fail.

-or-

Two: You are a jerk.

 

[FaeMinx]

As a bussiness owner that not only buys wholesale from other people, I also manufacture.... not only do I manufacture, I distribute my goods to resellers, and I also sell my goods directly to end customers.


It's actually very simple.


If i want to sell my goods to resellers, I need to make sure I can offer my goods to them at roughly half of what I offers them at to end customers and still make at least a 100% profit on what it costs me to manufacture my goods.


Therefore:


(manufacturing cost x 2 = wholesale price) x 2 = Retail price


I.e. Retail price should be about 4 times the actual cost of the product.


This is the most simple way of looking at it, so please don't tell me I'm not calculating all the myriad other pertinent factors when determining costs... I know.


Also, this example is for relatively small bussinesses like mine and ED's where the quantities we work with don't allow us to scale our prices. I.e. My minimum order qty for wholesale is 10 items. If someone buys 100 from me, I can't offer it to them at any less than my wholesale price, because my costs have not changed.


If I suddenly start getting orders of over a 100 regularly, then I would have to completely restructure my bussiness to cope, and order much much larger quantities from my own suppliers, then *if* I can get cheaper prices for such large orders I would reculculate my costs and offer a bit of a discount on orders over 100.... The added bonus for me is that then I will be making a higher profit on orders less than 100 at the normal wholesale price, because now my materials are a bit cheaper than before.


Isn't this common sense?


Where is the confusion?

 

[Grench]

Can we move on to more interesting things?

There will be two models of the Pyra: one with and one without 3/4G. If there are two models anyway, can/should they have other differences too (wifi 5GHz, eMMC size, ...), so their prices would also differ more? I would be interested to know ED's opinion on that.

Let me understand, do you say there should be 2 models with A LOT of difference (like not just 3/4G-LTE but also 5 GHz) or lots of different Pyra models? Second one seems like a bit silly, as ED won't be able to sell em' all ® but also there are some people like me (I hope) who want 5 GHz WiFi chip and 3/4G but don't care about eMMC size.

A lot of people misunderstand how market segmentation works.  There is a lot of lip service given to claims of making differentiated product offerings available to better serve audiences with different needs.  The reality, though, is that segmentation can be defined more bluntly.

Segmentation:  Ensuring that those who are able and/or willing to pay more do.

_wb_'s idea of having a differentiated product base isn't necessarily bad, but on a very small scale project like this it might be difficult for the additional margins gained through segmentation to overcome the additional costs associated with manufacturing, packaging, warehousing, marketing and supporting a differentiated product stream.

There is some thought to be considered around consumer mentality with this - it isn't just the relatively simple cost/profit calculation.  Having a low and high end product both presented could actually boost the overall sales numbers.

Think car models.  They might be theoretically offered in 3 trim levels low, medium and high.  But - despite being mechanically the same thing and only differing in cosmetic aspects, people usually go for a step up trim level or option package.  Good luck finding a car with manual transmission, flat paint, simple radio and cloth seats.  In theory they're made - but nearly nobody buys them.

So, why does the 'base' model even exist?  Because it gives a much easier to stomach advertised 'starting' price.  It pulls people in who would otherwise have simply skipped considering the product.  Once they're 'interested', then they realize that they can't live without the add-on that really isn't that much more expensive and the payments aren't too much more monthly so why not...

Same could happen with the Pyra.  That 'base' model with a lower price -could- be an additional audience draw, even if it doesn't sell as well itself.

 

[EvilDragon]

Ed.. dont drive me crazy! 

THE DEVELOPEMENT COSTS YOU ALREADY CALCULATED IN !!!! 

Its the very first point in your calculation!

Now you want them to calculate a second time! Why the hell???

I never calculated them in a SECOND time.

But unlike the production costs, the development costs per unit change with each unit sold.

e.g.: We got development costs of 50,000 EUR. With 1000 units sold, we'd have 50 EUR per unit. With 5000 units sold, we have only 10 EUR per unit.

The production costs are e.g. 400 EUR per unit. It won't change, regardless whether we produce 1000 or 5000 units.

So the developments costs are variable, the production costs are not.

Therefore, I have to do some estimations to get these costs back. I do NOT want to charge the full 50 EUR development costs per unit, as it would just set the price higher than it could be, which is not what I want.

So there needs to be another way to get these development costs back. Either it's with selling a lot of units (but that's unknown yet).

Or it's thanks to the resellers profit: With the Pandora, I sold about 10 times as many units directly in my shop than my resellers sold.

My guess is I'll sell at least 2 - 3x more Pyras than my resellers.

Therefore, I get some extra profit which should hopefully cover these costs.

Still, to be on the safe side, I need to include a minimum amount of development costs into the units, which is what I did.

And I never said that you should not sell yourself! You just thought that! I dont know why.

So far, you weren't able to explain how I should a give discount to resellers if I sell the units to them for my minimum planned sales price.

Which is what you are trying to tell me: "Do not raise the price just for resellers. Customers should not pay more because there exist resellers."

So the only way to give resellers a chance to sell units is to cut my own profit to zero.

What part of the above did you NOT say or what part did I (and the rest of the community members here) not understand properly from what you were writing?

Even in my example with fixed single distributors in different countrys you would sell for yourself for Germany and maybe other Countrys near Germany. 

I also told that in my text! I never said you should not sell anymore!

Umm... so... what's the difference here than before?

I don't see a difference between selling units myself AND selling them through distributors and selling units myself AND selling them through distributors. 

And you dont understand me till now I see. Again: 

Its a difference if you sell to reseller and give them discount because they buy much at once and holding the price high because of resellers!

TO GIVE A DISCOUNT, YOU NEED TO HAVE THAT DISCOUNT INCLUDED IN THE CALCULATION FROM THE VERY BEGINNING!

Which is EXACTLY that additional amount I calculated in!

That's what I told you multiple times already.

WHAT about that is so hard to understand?

ALL discounts work like that! You can't give discounts if your set price is so low that you cannot lower it anymore.

Which is exactly what YOU didn't like when you started the discussion.

If you dont understand this, I cant help you...

One last time. Give me just one simple but clear answer:

WHERE does this discount come from if the sales price is as low as possible for EVERYONE from the first unit he buys?

There cant be any proper solution for the price if you even yourself dont know what you want to do! How can I make a proper solution for you?

I know exactly what I want to do. I never had any issues with my calcularions. It worked for all products (including Pandoras rebirth) without any issues.

You just try to tell me I am doing it wrong but can't tell how to do it right.

You said so many things here and later they were not true anymore. 

You changed your mind about the service time 4 times here in this thread!

Umm... nope?

Where did I change what I wanted to do?

Yes, I forgot the exact laws about service time... but that doesn't even have anything to do with Pyras price anyways...?

You said the developement costs were calculated and now they arent?!

They are, but not fully. You ALWAYS need to make a mixed calculation based on estimations.

I didn't include that in the first post because it would be even more complicated for the normal reader.

You said you wont sell to customers in a country if a reseller sits there and now you want?!

Nope, I never said that as well.

I said that there are countries where I cannot easily sell to without having major costs, therefore distributors would be great there.

But that affects only some countries. USA, for example, is not affected (afaik), so I will also sell there regardless whether there are distributors or not.

Still, I expect more people to buy from distributors in the US, as it would be cheaper and faster for them (less shipping costs, same unit price).

You said you want resellers because of weee registration, delivery costs and time, service etc and now you want to sell yourself?!

WEEE is only within Europe, and I still plan to sell to all countries where it makes sense to register my company (just not all of them).

So based on the country, I will also sell myself, but will do that for a price so distributors can keep up with that.

It will certainly make things easier for me.

I gave you a wonderful suggestion with fixed dealers in different countrys; that would make much things easier because you complained a lot of things. 

You didnt want it and you said you want to sell yourself.

As mentioned above, I can't find any wonderful suggestion from you.

What's new about what you suggested to me there?

If you are NOT able to give me a proper solution where you explain how resellers will be able to sell the unit for the same price as I do if that's the price they buy it for, then there's no need for a further discussion, I guess.

Why the should? ITS NOT YOUR PROBLEM!!! I wrote that many times now! Its not your problem how they will make money!

It IS my problem.

If I rather want resellers as it makes things easier, it certainly is a problem if I can't sell the units for a price which makes it impossible for them to sell the units.

I would lose those resellers right away.

Ah, but as your company is doing stuff that good, we can easily make a deal.

You buy 2000 units for the same price every customer buys them from me (as I can't give you a discount, I'm already selling as low as I can) and sell them. I don't care how you sell them, okay?

Deal?

Do you have a single reseller until now?

Yes, multiple ones.

Did you speak with resellers so far?

Sure.

Do they know the prices? 

How much they will sell?

How should they know the price if I don't even know the production costs yet?

Are you playing dumb...?

I read enough to know: You have nearly no Plan what you do!

Best sentence ever. From someone who shows that he clearly has no clue that EVERY manufacturer he buys from has additional profit calculated into the sales price in order to be able to give a discount.

I am sorry, oh god of resellers, to be so stupid.

Please, calculate all prices for me, so I can make millions within a few days.

 

[EvilDragon]

As a bussiness owner that not only buys wholesale from other people, I also manufacture.... not only do I manufacture, I distribute my goods to resellers, and I also sell my goods directly to end customers.

It's actually very simple.

If i want to sell my goods to resellers, I need to make sure I can offer my goods to them at roughly half of what I offers them at to end customers and still make at least a 100% profit on what it costs me to manufacture my goods.

Therefore:

(manufacturing cost x 2 = wholesale price) x 2 = Retail price

I.e. Retail price should be about 4 times the actual cost of the product.

This is the most simple way of looking at it, so please don't tell me I'm not calculating all the myriad other pertinent factors when determining costs... I know.

Exactly how I did it, how it makes sense and what SoniX doesn't seem to understand.

He's talking about magical discount for buying a lot of units from manufacturers without allowing the manufacturers to calculate a base price which allows for that discount.

 

[WizardStan]

He's talking about magical discount for buying a lot of units from manufacturers without allowing the manufacturers to calculate a base price which allows for that discount.

My guess is he purchases bulk from aliexpress or some other Chinese market and then resells them in a store or flea market stall or similar. His arguments seem to be "anyone *could* buy from the same wholesaler I do, but I bring the product here and sell them directly thus adding a service that people would pay for, therefore I can make a profit" and he'd be right: there is value in buying something immediately vs waiting 6-8 weeks for something you've only seen in pictures. He then extends that to you and assumes that any reseller should be able to do the same, buy at your sale price and then add their own value that makes it worth selling more. He is completely wrong in this as it is a wildly different market. Maybe if someone were purchasing for a traditional physical store they could but there's no competition like that for online dealers.My major clue as to why I think this is how SoniX operates is because he says he doesn't have a MSRP. That just doesn't happen with "legitimate" manufacturing. (legitimate isn't exactly the right word, I don't mean to say all such Chinese sellers are illegitimate, but I can't think of the right word right now and hope the meaning is clear anyway)

 

[FaeMinx]

^ I also can't come up with a word, but I'm sure it pivots on 'ethics'.

 

[EvilDragon]

He's talking about magical discount for buying a lot of units from manufacturers without allowing the manufacturers to calculate a base price which allows for that discount.

My guess is he purchases bulk from aliexpress or some other Chinese market and then resells them in a store or flea market stall or similar. His arguments seem to be "anyone *could* buy from the same wholesaler I do, but I bring the product here and sell them directly thus adding a service that people would pay for, therefore I can make a profit" and he'd be right: there is value in buying something immediately vs waiting 6-8 weeks for something you've only seen in pictures. He then extends that to you and assumes that any reseller should be able to do the same, buy at your sale price and then add their own value that makes it worth selling more. He is completely wrong in this as it is a wildly different market. Maybe if someone were purchasing for a traditional physical store they could but there's no competition like that for online dealers.My major clue as to why I think this is how SoniX operates is because he says he doesn't have a MSRP. That just doesn't happen with "legitimate" manufacturing. (legitimate isn't exactly the right word, I don't mean to say all such Chinese sellers are illegitimate, but I can't think of the right word right now and hope the meaning is clear anyway)

Hmm, you could be right about that.

But then again, even AliExpress and other chinese markets have calculated price that they're also be able to give a discount, so they're "rising" their price for resellers as well.

 

[bzar]

Huh... I guess "The greater your knowledge, the greater your pain" DOES hold if you can't handle said knowledge

 

[grydholt]

https://xkcd.com/386/

 

[Exophase]

https://xkcd.com/386/

It'd be pretty great if Randall replaced that strip with one about overused internet memes.

 

[cinaeco]

I understand.


I just wanted to help.


Forget it.


Pay what you want. For me its overpriced. Wont buy a Pyra and wont write anymore here.

RIP SoniX... you couldn't just follow advice and save a little bit more money...

(Hopefully, he'll still buy a Pyra anyway at some point. If someone really decides to Forgo an excellent machine just because he couldn't win an ultimately-inconsequential forum argument, he really has his priorities and pride set up the wrong way...)

 

[bzar]

https://xkcd.com/386/

It'd be pretty great if Randall replaced that strip with one about overused internet memes.

Internet memes are the modern folk sayings.

 

[pmprog]

RIP SoniX... you couldn't just follow advice and save a little bit more money...

Who said he couldn't afford it? He just said it was overpriced and he wouldn't buy it

 

[cinaeco]

RIP SoniX... you couldn't just follow advice and save a little bit more money...

Who said he couldn't afford it? He just said it was overpriced and he wouldn't buy it

I think we're talking about the same thing. In the beginning, he was saying he couldn't justify the cost to his family/responsibilities. Planning and saving helps with that.

 

[FaeMinx]

I wonder how much of his argument was geniune concern over the viability of the market price, and how much was just pure self interest.


Is it fair in saying:


"Around these parts, we don't take too kindly to young wipper snappers who come in here hollerin on about reforms and such when they have no understandin of the 'Code' of this here community!"


"Damn upstarts... pulling into town, kicking up a fuss, and then leavin again before they even get a lay of the land... Ah well, gives us local yokes somethin to chew on while we watch the grass grow eh?"

 

[EvilDragon]

Well, hard to tell what he means with "overpriced". Could be the price was too high for him and he wanted to bring it down.


Could be he thought the price was set too high in regards to the production costs (but then again, most other electronical products would be even more overpriced, as they add A LOT more than we do to the production costs price).


Or he could mean it's overpriced compared to other devices, but we all know that's impossible to change with lower production numbers.


So we don't know what it overpriced means.