Patent and Invention Help Forum

Low production strategy

Ken

Low production strategy
« on: January 08, 2014, 07:31:10 PM »
Has anybody (reading this) benefitted from using any of the low-volume injection molding services? I wonder what's the best way to take advantage of them. How do you strategize for your marketing, quality control, and most important of all, PROFIT?

For example, my product can be made mostly of plastic. There's a metal hardware piece and some LED electronics. But not counting the electronics, the total estimates for low-volume runs come to 14k for 20 units, 18k for 200 units, 55k for 2000. Ouch!

And these are not even "mass production" quality either. They require special tweaking to the CAD models because of their versatile molding machines. So surface textures, colors, and certain forms are very slightly off. There are limitations on what you can produce.

Then if you look at my invention, it looks like it can be made in China for under $10 and retail for under $30!

Do the math. What's a good strategy for profit?

Brad

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Re: Low production strategy
« Reply #1 on: January 09, 2014, 04:46:15 PM »
Why is the price so high?  Is it because it costs a lot to get the mold made so the first piece is essentially $13,000 and each piece after is very cheap?

 
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Ken

Re: Low production strategy
« Reply #2 on: January 11, 2014, 08:39:14 PM »
That's one way of looking at it. But the mold cannot be used later in any regular factory.

It sucks. Unless I'm missing something.

Re: Low production strategy
« Reply #3 on: January 15, 2014, 04:44:06 AM »
Haha yeah, manufacturing...This is probably the most annoying process of running a business.

The pricing you mentioned doesn't surprise me. $700 each if you order 20, $90 each if you order 200, and $27.50 each if you order 2000. I think you guys are right about the mold being costly, but something I know (as a research scientist, nothing to do with business) is that when you order something to be manufactured, its always much cheaper if you order a lot than to order a small quantity.

The reason isn't (wasn't) the mold, though. The reason is because the factory had to stop production of whatever they were making, set the machinery up for your item, and produce it. (Only to deal with the hassle of changing it again when your order is complete.) Since setting up the machinery/stopping other production costs them money, they charge you a lot for small quantities, which is why its better to order in bulk. (And what would happen for scientists that needed a certain item is a bunch of these scientists would get together, buy something in bulk, and split the cost of the item being produced; since no one ever really needed a lot. Of course, you don't have the luxury of splitting the cost with anyone since its just your item...)

Anywayyy. It's hard to really decide what you should do. Obviously the optimal thing would be to order 2000 for the best price, but the problems are:
1. Will the product sell well enough that its worth it? (And not necessarily that you'll sell all 2000...but if you think you can sell 60 (aka 3 sets of 20), then you might as well pay the extra and keep the inventory. (As opposed to ordering whenever you need it.)
2. Price point is something to consider. You can't really take a loss on selling your item, but you want decent enough margins.
3. Can you afford the mass order?

So yeah, it depends on your current publicity/how well you're going to sell. Of course mass ordering is best if you can afford it (assuming it'll sell eventually!)
« Last Edit: January 15, 2014, 04:46:47 AM by Blueobelisk »

Glen

Re: Low production strategy
« Reply #4 on: February 11, 2014, 12:05:11 PM »
Consider having the short run 3D printed as prototypes, maybe 20 units. Cost will still be high per unit, but no tooling fee. Use the money you save on tooling to hire a marketing firm to promote your prototypes to potential buyers. This might mean displaying your product at the appropriate trade show and twisting the arms of some distributors. When you have some orders in place (like 10,000 units), now any venture capitalist should be glad to float you the buckage to get that first order in and out the door to make a quick dollar (or $10k). Now you've got the tooling, and future orders, even 2,000 pcs, will cost less than the original quote, and you're off to the races. Good luck.