My $0.02 on the matter...
People don’t seem to understand small volume manufacturing vs mass manufacturing. Boutique companies aren’t doing runs of 10,000+ units of each product and own their own manufacturing plant from pcb/panel to parts. With labor that prob makes less than $8/hr.
In America, basic assembly labor starts and $15/hr +. If they’re full time, insurance is involved.
Boutique manufacturers can’t afford to make 10-20% margins on low volume product sales because it costs significantly more to make 100-250 units per run VS 10,000 units.
In a run of 100-250, a module might cost $90 to manufacture (simple or complex) Cost with labor. That covers manufacturing cost/labor alone. We aren’t factoring in development cost here.
Example.
My SubMix6 or CVP-1 modules. $75/ea to have SMT parts assembled into 250 pcbs (in America), all panel parts (jacks/pots/knobs), box, screws, knobs. Labor is $15 to final assemble, test and get it on the shelf as ready to ship inventory. My dealer needs 30% margin minimum, more if they order in volume. I need to make 30% Minimum to scrape by for profits and keep my the lights on, company of 1 paying rent and my own insurance.
That MIGHT even cover future R&D for future products but I doubt it.
So let’s run the numbers.
Retail was $199. It’s a 3-6 channel active mix bus mixer. That’s a lot by most people’s opinions for a boring simple mixer. But 30% of $200 is $60. So a dealer buys it for $140 to make their 30%.
Remember... my cost is $90 with labor. So that leaves $50 of profit. That’s less than 30% of retail for profit I’m making. That barely keeps the lights on and the rent paid for the shop space let alone help pay for future product development.
In most situations... the cost of doing business in America and making money to survive is 3-5x markup of cost/labor depending on your method of business. Well guess what. I can’t afford to pay employees to assemble 10,000 modules at $15/hr + insurance to get my cost down to $30/unit. To retail at $75 or less and move more units at a smaller margin.
Building product in 10,000+ units leads to significantly cheaper cost in parts per unit but you have to buy in bulk. Next to you have to have labor that doesn’t cost what it costs in the United States. Remember $15/hr used to be trade labor value. It’s soon to become the national minimal wage! And $15/hr is hardly enough to survive in this country as an individual.
So your labor has to be cheap, you have to have the capitol to fund the costs of 10,000 units. Then when it’s all said and done you are selling for a smaller profit margin based on the idea that the 10,000 units will sell because they’re priced so low. Sell more for less.
This is just an example using two basic utility modules. Don’t get hung up on the modules I’m talking about specifically. It doesn’t really matter what the product is. It can apply across the board.
It’s really frustrating when consumers complain a lot boutique manufacturers “charging too much” for gear with “300%” profit margins. As if it’s some form of gate keeping. When they obviously have no clue what they’re talking about.
I get it. It’s expensive. But please, have a little sympathy/understand and respect for the small companies that will actually be effected negatively by the flood of mass manufactured / cheap synth products in this relatively niche market. We’re simply trying to make a great product for creative minds and an honest living.
I get that this is just one perspective... but I don’t think it’s too far off as an average, small scale manufacturer in the United States. I could send my products off to China to be assembled. But now they’re subject to 25% tariffs. Despite our president saying that cost is what China is paying. It’s not. So even that is costing more these days.
Ultimately...
Support your fav synth makers and synth shops.
Buy local if you can.
Make great music/sounds.
Be most excellent to each other.
Love turtles.
Peace.
) ziet als de doelgroep, in plaats van de doorgewinterde modularist.
