I have worked at many different kinds of companies, including textbooks, religious books and periodicals, computers, home audio, shoes, and others.
The uniform rule of thumb for calculating retail price is to multiply the cost of manufacture (parts and labor) times four. If a textbook costs $12.50 to print, its retail price will be $50. A $400 stereo receiver in 1972 cost $100 to make.
This pricing is not based on greed, but on reality. The total cost to build a product is not just parts and labor; there is also documentation, income tax, rent or mortgage payment, utility bills, insurance, property taxes, packaging, shipping, distribution, and advertising.
Sure, if you're a lone guy with a day job banging out junction boxes in your garage when you get home, your cost per unit is much lower. It explains why I have an all-tube handwired PTP phono preamp available for a little over $1K. But as soon as you scale up and turn it into a self-sustaining enterprise, the true cost of manufacture goes way up.
Henry Kloss almost brought down his entire Advent Company, which made the most popular enthusiast audio speakers at the time, because he under-priced his Advent VideoBeam big screen TV. He had to bring in a financial expert to save the company. The first thing the guy did was double the price of the VideoBeam from $2500 to $5000.
The uniform rule of thumb for calculating retail price is to multiply the cost of manufacture (parts and labor) times four. If a textbook costs $12.50 to print, its retail price will be $50. A $400 stereo receiver in 1972 cost $100 to make.
This pricing is not based on greed, but on reality. The total cost to build a product is not just parts and labor; there is also documentation, income tax, rent or mortgage payment, utility bills, insurance, property taxes, packaging, shipping, distribution, and advertising.
Sure, if you're a lone guy with a day job banging out junction boxes in your garage when you get home, your cost per unit is much lower. It explains why I have an all-tube handwired PTP phono preamp available for a little over $1K. But as soon as you scale up and turn it into a self-sustaining enterprise, the true cost of manufacture goes way up.
Henry Kloss almost brought down his entire Advent Company, which made the most popular enthusiast audio speakers at the time, because he under-priced his Advent VideoBeam big screen TV. He had to bring in a financial expert to save the company. The first thing the guy did was double the price of the VideoBeam from $2500 to $5000.