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Check out this almost $8000 ultimate II system

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shmokes:
I'd pay $8k for it if I had lots of disposable income and wasn't a frequenter of these boards.  Think of all the things we do that we take for granted, but at one time required SERIOUS investment of time for research:

- How to make ACT LABS gun work
- Where to find a bloody complete set of ROMS
- CLRMAME
- How to interface controls with a PC
- How to install and configure a frontend
- How to use a router
- How to mount monitor glass
- How to make the whole lot turn on with one button

The list goes on and on.  Some people, who have the right knowledge and skills, build their own house and save tens of thousands of dollars.  But the vast majority just find one that's already built, because they have neither the time nor inclination to learn how to do it on their own.

Sure, knowing what I know, I would never pay $8k for this thing, but I already know all about frontends and ROMS and so on.  Many people who have $8k to drop on a toy like this would much rather depart with the money than the time it would take them to figure it all out on their own.

patrickl:
You shouldn't compare the time and effort spent on a prototype with the price for the actual product. You don't pay a couple of million dollars (if not billion) for a car either.

Sure it will take some investment to build a cab at first, but surely these people built a cab before already. Building a second cab based on an existing design takes hardly any time and if you do this routinely you can have all the woodworkign done rather cheap. Putting a cab together won't take more than a day or two.

If you order a custom built cab (build to your specifications) then maybe $4000 would be realistic, but if it's a "mass" produced cab by someone who probably runs a "company" from his basement (read no investments in office and such) they should be able to sel a simple cab like this for $3000 and still make a huge profit.

Santoro:

--- Quote from: patrickl on July 14, 2004, 08:45:29 am ---You shouldn't compare the time and effort spent on a prototype with the price for the actual product. You don't pay a couple of million dollars (if not billion) for a car either.

Sure it will take some investment to build a cab at first, but surely these people built a cab before already. Building a second cab based on an existing design takes hardly any time and if you do this routinely you can have all the woodworkign done rather cheap. Putting a cab together won't take more than a day or two.

If you order a custom built cab (build to your specifications) then maybe $4000 would be realistic, but if it's a "mass" produced cab by someone who probably runs a "company" from his basement (read no investments in office and such) they should be able to sel a simple cab like this for $3000 and still make a huge profit.

--- End quote ---

I really have to respectfully disagree with a lot of this.  

I am unaware of any business  that doesn't price it's R&D into its product prices.  I am sure that at least a thousand dollars of a $50K SUV is recovering R&D.  And that is selling millions of cars.  

I am starting a small business part-time and expect to sell 5-10 custom ordered cabs per year next year.    I built my first project cab and it probably took 80 hours.  In addition The original time spent reseaching on the 'net was easily 50 hours.

As far as time spent building a new cab, I am building another, new design that I expect to take about 40 hours.  The cabs after that will probably take about 35, but without a factory I will not get much more productive than that.   Putting togeter a cab in a day or two is a fantasy.  You could assemble the cab 'box'  itself in that time, but there is no way you could build a good qualtiy cab start to finish in that time.  If you want a sellable-quality end product you need to take time to do it right.  You also need to spend 7-10 hours on ordering parts frorm at least five vendors, a few trips to Home Depot, and going to the glass shop.

My cabs will be somewhat differentiated from others.  They will include almost all of the ROMs from StarRoms, licensed to the buyer's name.  It will be delivered to the buyer's home if local, and will have text on the Marquee that is customizeable.  I will probably include a few hundered tokens with the mechs adjusted for them.  I will be available to consult on the installation of other softeware or ROMs that the buyer might be able to legally obtain.  

I live in a fairly affluent area {edit: on the wrong side of town, however :)} and there are some of my neighbors wouldn't flinch at paying $4-5K for this total package.  They have no idea about ebay, and even if they did would probably pay more not to have to deal with the risk and inconvenience of ebay.  When they look at a Galaga/Pac reuinon for $3k at Brookstone compared to mine that plays 80 games out tof the box and is capable of 4000 more, it isn't a stretch at that price.

And "Huge Profit" is a relative term.  If one make a thousand dollars off of a $3000 cab, after taxes one would have netted a lot less.   Personally I highly value my spare time because that is the time I spend with my family.    The 40+ hours I didn't spend with my wife and kids is worth at least as much as the after-tax profit  under a $3000 pricing structure.

So in a nutshell,  If the marketplace where I live will support my pricing, I will make money.  If it does not, I can build cabs with my stocks of materials and sell the cabs for at least as much as I paid for the parts and get out of the business without a loss.

It's all about to whom and where you are marketing.  You notice I am not marketing here or on Ebay. I am well aware that those probably are not doable for me.

But I still say $8k is a stretch by any measure.


FractalWalk:
You shouldn't compare the time and effort spent on a prototype with the price for the actual product.

He wasn't comparing cost to prototype but rather the inherent value to the customer. What do the raw parts of a car cost? Certainly you could make one yourself for way less than what it is sold for. But that would require specific knowledge, time and investment that most people would rather not mess with.  He's saying a rational person who has no knowledge may think $8k a fair price. Much like some people think $50k for a car is a rational price.



but if it's a "mass" produced cab by someone who probably runs a "company" from his basement (read no investments in office and such) they should be able to sel a simple cab like this for $3000 and still make a huge profit.

I doubt it.  There has been two estimates so far in the $2k range for parts and that doesn't include labor or investment in tools.  When adding in all the real costs (time, investment etc.) I bet $3k would barely cover it. My current cab will easily cost me more than $3k if I factor in all the relevant costs.

Now if it is an assembly line that is cranking out hundreds of these things a year then that is another story. You certainly could do this for under $3k profitably but there would have to be a large demand to support that business model.

patrickl:
I guess I wasn't clear. I meant that the $8000 would be the cost for an initial cab and all extra design invstments needed to start up a production line. So $8000 woul dbe the cost of a prototype (and something extra). You might say that is a fair price since that would be what it would cost a person to build the same cab (with an hourly rate for a professional builder factored in). But then several millions of dollars would be a reasonable price for a car ...

Of course you spread the R&D costs over the cabs you sell, but seriously, these builders are not a company. They are just copying a cab they built themselves (or even from someone elses plans). So really what is the cost of R&D? Anyway, you don't spread the R&D over one cab.

Those 2K estimates were made up from kits. You can build a cab for $1000 worth of parts easily. Don't say it's not so, since it sure can. Of course you need to calculate the hours of work also. If you are spending more than 20 hours building a cab then you shouldn't be building that cab yourself. Assuming you have the plans ready and you've built one before (or you are using a kit) you don't tell me it takes more than that. So lets take a wild guess and go for $75 per hour. That's $1500. Add a bit for "R&D" say $500 and it all adds up to $3000 with a seriously healthy margin of $2000. BTW the income taxes are over the margin and not over the gross value and the VAT (if you pay that at all) is minor compared to the whole value.

Of course you could buy much more expensive parts (or change to using complete kits so you don't need the tools and you even spent less time). Lets say we spend an extra $1000. Then things add up to $4000. Sure if you add extra service and customizing you might go up to $5000. But that's really assuming you can find enough people who don't care to pay too much.

Of course if people are prepared to pay too much then that is their problem, but that doesn't mean that the price is right.

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