[Open-graphics] OGD1 pricing

[Timothy Miller]

On 2/28/06, Richard Smith <smithbone at gmail.com> wrote:
> > >
> > > Where are you getting your raw parts cost from?
> >
> > A variety of sources.  When you get hold of the schematic, you are
> > free to speculate about parts and assembly costs.  But we've decided
> > not to talk about it.  It's not that we wouldn't LIKE to discuss it,
> > but there are people who don't grasp the economics of manufacturing
> > and think that raw parts costs are all there is to it.  We just don't
> > want to open that can of worms.
>
> The only reason I ask is that if you are not getting it from someone
> who does this sort of thing then you probally are not gettting a
> realistic number.

Howard has over 15 years of experience with this.  I think he knows
what he's doing.  :)

But here's the thing.  At Tech Source (or anywhere else), the
engineers would work up a design and price it for parts, fabrication,
assembly, etc.  Then they turn it over to Marketing and Sales who have
people that understand other economic overhead factors such as
testing, amortizing bad parts, customer service, R&D reinvestment,
etc.  Through a process I know too little about, they compute some
number that accounts for all that stuff, and only THEN do they decide
how much profit they want to make.

>
> Now that number may be higher or lower.   If you have overestimated
> the parts cost you may have underestimated what it takes to build the
> thing.   Or perhaps vice versa.

Exactly.

>
> Are you going to release a BOM?  That would make it easier to come up
> with a guess.  If I do come up with a psuedo quote what should I do
> with it?

I'm assuming that that's in the schematics, but I haven't seen them
yet.  And you are free to try to quote it.  Your price may be lower;
ours may be.  We'll see.

But then there are all of those other economic factors.  Saving $10 on
parts will only save $10 on the final price.

> One thing I have learned about price is that its very much an open
> topic.  When we deal with our part's vendors we talk target price.   I
> need to make this board for $X now go get me pricing on these high
> dollar parts that will meet that.   Then to get that price we may have
> to purchase N amount of parts sometimes non-refundable.
>
> Thats the game and sometimes it very much is a game.

Yup.  We play that game too.  In fact, we get parts somtimes through
third parties.  They buy bulk from the manufacturer and inventory
them.  We then get those parts at nearly bulk pricing but in much
lower volumes.