If you are going to get into this business now, you had better have some unique ideas to build up - you won't be making bank from standard VCOs, VCAs, or VCFs anymore.įor those who like a history lesson, modular synths are cheaper now and more plentiful than they have ever been. Some are lucky and they have made innovative enough products that make enough sales to actually make a living at it (I don't - I freelance graphic design for my main income). This business is a labor of love for many involved. Remember that unless you sell direct, you are throwing %30-%40 of that cost to the dealers too. We do make controllers and utility modules and they seem to be the last thing people will buy so that is one limiting thing in my case, but I know many makers who don't do runs over 250. We seldom can make runs over 100 units, we just don't have the cash. My company is 3 people, 1 designer/graphics/assembler/tester/shipper/marketer (me), one PCB designer/tech services guy, and one business guy (who is soon leaving to a real job). I have easily over a half dozen new modules fully designed that I can't afford to make. Most of the money made will go into the next run or to develop the next module. NONE of the small makers are making lots of money from this. Just in time manufacturing is FORCED upon many small makers. If you use exotic parts you pay a premium and hope that you can get them to make the run. you do all the books yourself too and pay all the business taxes and fees. You most likely don't even figure in a wage for yourself - you do the testing, final assembly, boxing, and shipping yourself. You are paying the shipping and stocking fees for all those parts. Remember, basically you are paying the wages for all those people. It is not uncommon for that to cost $.20 a part to do. All the panel mounted pots, jacks, switches and LEDs are soldered on by hand in most cases. If you aren't making 500 of them the price goes up. The PCB is probably etched and drilled in a different location and sent to the SMT house and part of the price is shipping cost.
You are paying a stiff one time fee to even setup the equipment and to make solder mask etc. Unless you own a $100,000 pick and place SMT rig you are farming the board cost to an outside firm. People seldom factor it the cost along the pipeline on the way to your hands. A BOM that is 10X less than the retail cost. I have seen these same arguments used on many consumer level electronics. By comparison getting a to-specifications built wooden shelf from a local woodworker is going to cost you much more, and what you are paying for is the cost of labour and equipment. The cost of labour for one Rast has been reduced to minimum, and the materials aren't particularly expensive. The more individual variation there needs to be on the menu, and the more skilled workers you need to function up to expected standards, the more the cost of the food will rise.Īnother good example would be IKEA: Rasts cost very little because they are incredibly easy to put together with the proper equipment. McDonalds is cheap because there is a standardized menu pretty much everywhere in the world, and everything is optimized so that your food can be prepared by cheap unskilled workers in very little time. Educated people, or people that really know what they are doing are even more expensive, and since you need these people to do your design work no matter the size of the company, smaller companies employ comparatively larger proportion of these well-paid people. I feel like I'm beating a dead horse here, but here we go anyway: Components are cheap.
Therefore infinite profit margins, literally making money out of nothing.
The street price for Ableton Live is much higher than that, and the BOM is literally zero.
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