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Thread: Start-up products

  1. #1

    Start-up products

    Hello!

    I'm a massive fan of Teensy and use them in almost all my projects. Some friends and I are pursuing the idea of starting an electronics based start-up company. We were wondering if anyone give us some quick guidance or help with market research. We've tried contacting a lot of retailers but without a completed project it seems their policy is not to discuss this kind of thing unfortunately!

    One of the first projects we were considering finishing was a unique type of lighting/interactive product for hobbyists. We were wondering about the feasibility of pursuing this in terms of costings. There are a few similar products around in terms of quality, genre and pricing (but not design!) - things like LED Matrices/Strips. I wouldn't want to 'pick out' a product but any LED/lighting items around $40 would most likely be similar for the sake of comparison here.

    Broadly speaking, could anyone advise as to how much such products are bought for by retailers (like Adafruit/Sparkfun, or any other) if they are sold at around $40 and how many of such a product would be sold per month for a single retailer? If there is anyone with any insight - your guidance would be very much appreciated!!

    I understand that there may be quite some variation between different products. Even if you know if there is a high or low profit margin in this industry and if quality or quantity is key that would be great. I don't know if the profit would be 50% or 1%! I'm also interested to know if there is a good market for these products in your opinion, or if it's too competitive, for example.

    Thanks!

  2. #2
    Senior Member onehorse's Avatar
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    A lot of your questions can be answered by perusing the www.tindie.com site where similar products are offered for sale.

  3. #3
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    Also, allow for a rule of thumb

    Retail price = 200-400% of BOM cost.

  4. #4
    Senior Member onehorse's Avatar
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    Retail price = 200-400% of BOM cost.
    I take the input cost for individual components and multiply by 2.5 or 3 to get the retail price. Then I try to reduce costs by buying in bulk and streamlining assembly processes to maximize "profit". Even 3x is a relatively slim margin after factoring in taxes, packaging costs, selling fees, and, of course, if you want to get compensated for your time.

  5. #5
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    Of course, retail price depends fab cost, warranty allowance cost, marketing/sales, G&A, blah blah, on number of distributors in the chain, their markups, etc.

  6. #6
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    I'd say do yourself a favour and don't try and compete with the big names already out there. They will always be able to market their product cheaper, due to good pre-existing trade links and the power of bulk buying (manufacturing, parts etc).
    Instead, try and find yourself a gap in the market; something that doesn't already exist.

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