KickstarterForum.org

[Jonathan08]

Hi,

I'm interested in hearing from campaigners who've ran succesful campaigns. I will sit down with a great idea, get quotes on manufacturing, start to get excited but then when I crunch the numbers, it never pans out. I will provide an example below.

I invent widget X, CNC part, roughly 6x6x6" dimensions, approx 1lbs shipping weight.

All costs in US.

Cost to manufacture widget X is 30$, CNC machined in China.

Cost to ship widget X from China to my door here in Canada, 10-15$/unit (estimated, with import taxes and duties included)

Cost for specialty packaging, shipped to my door in Canada, 10-15$/unit

Cost for GST, goods and services sales tax is 25$
(estimating that final selling price is anywhere from 100-200$)

Factored in cost for returns, cancelled payments, no shows etc. 10-15% or 23$/unit based on 150$ selling price.

Cost for KS and amazon fee's, 10% or 15$ based on 150$ end selling price.

Cost for extras like stickers included with widget X, 3$/unit.

If we add all these costs up, what started as a 30$ cost to manufacture turns out to be 126$!!! before my mark up. Typically in business you want to at-least meet your cost in profit margin, so that means I would have to sell widget X at 126$x2= 252$ just to make it worth my time.

at that price, I basically kill all incentive to buy.

Now that's using widget x @ 30$ manufacturing cost. I'm just wondering if I've missed some costs or am I overestimating. It seems like even if my manufacturing cost was like 5/unit$, I will still end up having a final price point that is way too high. Am I missing something here?

[giftsandcoupons]

Hi, I think it depends all about shipping. I'm a westerner living in China, I know it's all about volume in order to get a price down.

Some China manufacturers can send to the customer's directly, they have their own cheap postal service in China and I guess it depends on what service they're using.

I guess my advice didn't help much, as it's all quite vague but just wanted to let you know that postage costs aren't as clear cut as you think they are

[Jonathan08]

Hey Gifts,

Quite alright, any feedback is good feedback. I think I might be over estimating shipping slightly. Because @ 15$/unit, if I was shipping a crate of 200 units, that means it would be 3000$, which seams completely too much. I've had shipping quotes before for palettes, the cost per cubic meter was a only few hundred. In any case, I'm waiting from my manufacture to get back to me on shipping costs....but then again, I imagine there is duty fee's also when coming into my country. I will need to contact the CRA for this.

What about some of the other costs, I used 15$/unit for special packaging, but I got this quote from a local packaging shop. I'm assuming if I had the packaging made overseas it would cost much less. Given todays "green" climate, I'm not looking for anything fancy, I think a normal mailer box would be fine but I'd like to atleast have my logo on it, for branding purposes.

[giftsandcoupons]

Yeah I'm pretty sure you can get around those fee's. I've used DHL and UPS to send stuff from the UK to Hong Kong, the fee's were basically the same price as the value of the contents.

Whilst in China, they say that packing and post can be very cheap...depends on who you know?

[Jonathan08]

Cool. Ya so I just got the quote back from my manufacture, looks like it's only 400USD to ship to my closest port. Now I'd have to then pay for a Uhaul truck to pick them up and bring them to my location, about a two hours away, but that shouldn't cost that much. Hmmm....figure 400USD for 200 units/ about 2$/unit add an extra buck or two/unit for the Uhaul truck, so about 5$, little better than 15$/unit. On the right track.

Now my concern is, what if the campaign explodes, would shipping 1000+ units from China come down to more or less per unit?
ie, is larger quantities more expensive to ship vs. smaller quantities? Would I be paying a discounted rate to ship 1000+ vs. 200 or would it come out to being more per unit.

Sorry, so many questions, I just like having all my bases covered before I go into anything like this, no suprises...

[Jonathan08]

Oh, I just realized the GST (goods and services tax) would only be applied to Canadian buyers of my widget since I'm in Canada. If I ship internationally, then they will pay taxes on entry into the country. So I can figure in a much smaller amount for that. Like maybe say out of 200 backers, only 50 are Canadian..... I guess it would suck if everyone turned out to be Canadian...maybe I will just half it to 7.5%.

[giftsandcoupons]

Hi Jonathan, I sent you an email.

[skosmach]

giftsandcoupons - I'd be interested in receiving the email as well I'm in the same boat. I'm about to launch my project and would like to lower the price a little if I can confirm the shipping can be reduced.

[Jonathan08]

I'd say talk to your manufacturer.

@ gifts, I seen the e-mail, I will really just need more time to get back to you, still a little while from launching the campaign..

[Jonathan08]

Hi guys,

I'm at the point where I don't know what to do, I've been working on a project for a while that I'm excited about but because after costing my project, I'm just not sure if I'm too expensive or not. My product is a desktop item, could be considered desk art, but it's a premium design but you can have similar things out there for far cheaper. Mind you, mine is very cool looking and has a few special functions. My current price point in Canadian dollars is 275$, or about 200$US. and that's without taking much on the profit side. But I'm just not sure if people will want spend that much for this item, the big issue is that it's purely CNC machined, this takes up the bulk of the cost but also, factoring in things like the 15% for backer no shows and no payments, and the KS fee's and shipping and GST tax, it just adds up.

I looked into getting it die-casted but after factoring the tooling cost, it comes out to about the same, and I loose the coolness of CNC. My raw manufacturing cost for CNC is about 88$/unit US and about 72$/unit for die cast (but add in expensive tooling cost). After I add all the other expenses, I am up over 200$ in no time.

How do companies make things for so cheap? can anyone recommend a good CNC manufacture with competitive rates?