[Open-graphics] OGD1 pricing

[Timothy Miller]

On 2/27/06, Patrick McNamara <wpmcnamara at yahoo.com> wrote:
> In some ways, I think it depends on what $X is.  If it's $50US worth of
> parts, selling it for $300 is a 6x markup and would probably still be
> considered really cheap.  On the other hand if $X is $250US, a 6x markup
> is $1500 which is probably more that you want to target for as it may
> put it out of reach folks you really want to have it.

I wasn't QUITE hitting for 6x, but it's good to know that that happens
for comparison.

> Here is another way of looking at it.  Assume you need $2M US to do the
> ASIC run.  Assume also that if you can fund half the cost, you can
> attract investors for the other half.  That means you need to raise $1M
> US.  If you make $250 net profit per OGD1 board, you need to sell 4000
> boards to make your target.  Do you think you can make that target?

Is it possible for us to sell 4000 boards?  Sure.  Do we have the
marketing ability to reach all 4000 of the right people?  That's
really iffy.

> Do
> you want to add more in to help offset the developers cost (time,
> effort, etc)?

Well, to Howard, Andy, and me, we're not really trying to offset
anything.  We're going to spend a few thousand of our own money and
call it lost.  Every penny of income earned from sales of these boards
is going to be packed away until we can justify spending any of it on
something productive.

Say we make $1 million.  If we don't have a partner at that time,
we're still stuck.  Even if we make $2, we're still stuck between
choosing to spend money on ourselves as employees versus being able to
make an ASIC.  If we make $3, we've got a surplus.

> This is really a business proposition.  Do a bit of
> research if you can.  Do you know anyone in university engineering
> programs?

Just talked to them.

> Find out what they would be willing to pay for a board of
> this type.

"A few thousand dollars" for a board that has much less logic area
(but a lot more other frills).

> Also, compare it to boards already on the market with
> similar specifications.

The most similar was over $2000, last I saw.

> If you can undercut them substantially, great.
> But, remember, this is a fund raiser.  The boards will be more expensive
> to begin with and yes, you will here some grumbling from some folks
> about the price.  Prices go down over time.  If someone who is going to
> be a really productive developer can't afford one, there will be people
> who will donate them.  Those that just want a cheap card to play with
> will either have to wait, or save up their hard earned money.

I'm thinking that, with limits, we can sell to "OGP developers" at
deep discounts.  In that case, it's not a fund raiser.  We need to
make token profit to be sure the person is serious.  And the warranty
won't be transferrable in that case.

> Also, remember that the higher the price, the higher the expectation for
> a "flawless" product will be.  We all know there are bug in hardware and
> software, but if you are flogging a $1000 development board, people will
> expect the thing to work (rightly or wrongly).  Be sure and set peoples
> expectations for what they are getting (i.e.  A raw development board
> with no image and very little provided tools).

Excellent point.  We do not have a working PCI core.  Making some
simple logic to test the board won't be TOO hard, really.  All we need
to do is check for certain kinds of signal integrity and make sure the
memories work.  But we may have boards to sell before that work is
done.  It seems logical to sell "alpha" boards at a lower price... or
to give them a longer warranty so that should they discover a
manufacturing flaw, they can get it replaced at a later date.

> Just my somewhat long $.02.

Excellent food for thought.  Thank you.