Forums: Discussions for entrepreneurs and small business.

Non-technological products manufactured in large quantities are pretty
much the cost of the materials + logistics to dispatch to each local
market (e.g. logistics to the distributor site).

So, whether this is a car front bumper or a small toy made of a single
piece of plastic, the cost is pretty much all in the material (almost per
weight).

You have to know that an injection press - for small parts - has a
multicavity tool, so every 40s or so, they can make up to 100 pieces.
Tooling costs and machine cost becomes a negligible fraction of the
wholesale price. I have seen machines capable of producing 1,000,000
parts in a single day (yes, 1 Million parts).

It could also be that your manufacturing price was also on the high side.

Typically though, you are at a disadvantage since most products out there
are manufactured in high quantities. Your only opportunity is to offer an
innovation of some sort that will be difficult or irrelevant to be
reproduced in large qantities (e.g. niche markets).

The suggestions above, e.g. multiplying by 2 twice, holds only when you
are addressing large markets. For niche markets, the multipliers can be a
lot higher to amortize the manufacturing which become much more
predominant in the final equation.

Stephane

Stephane brought out some good points.  My former partner and I disagreed on pricing of our niche product of high end audio.  For such a market my guy prices products wholesale at barely 2X cost.  Well, they`re still struggling.

OTOH, Chinese mfg price their stuff barely 15% over cost.  That`s why many US businesses have their product made in China.  Shame on me too because I have my electronics made in China too.  If I have them made in US, my price would be much higher and I can`t sell as much.


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