Bill,
great comment & re-post..
I kindly snipped the bulk of Chris' post so RCSE subscribers won't have to
endure it like they have at least twice..
At 02:08 PM 5/13/00 -0400, you wrote:
>Thanks, Chris. Great Post!
>
>--Bill
>
>
>On Sat, 13 May 2000 10:11:15 -0700 ScrollSander <[EMAIL PROTECTED]> wrote:
>
>Hi Richard + All,
>
>Well, meeting someone happened to me. I was carrying a 2M fuse plug back
>from LA to OK through the Dallas airport. You know, a big black club with a
>fin on one thin end. I was walking to the plane when someone came up and
>asked what plane it was for. He flew RC gliders and thought most FG fuses
>were for scale ships. (He might have liked the ole "Caproni" fuse/mold I
>have.) We talked for about 10 minutes and then we were off to our flights.
>It does happen.
>
>As for the market, I have some idea as to market from the manufacturing
>sense with ScrollSanders. (http://www.scrollsander.com) For those of you
>who do not know about them, check them out and then take a look at the Micro
>HLG collection I have posted on the page. (More coming). I have fuse
>molding pictures on the site also, and I hope to have wing molding (the old
>way) soon.
>
>There is a big difference between a manufacturer and a distributor. Ed
>Slobod (Pierce Arrow Co, Paragon) once spent alot of time with me talking
>about pricing and who makes the real money. The money is not by the
>manufacturer but the distributor. If Karlton had to make any of the items
>directly he would not be in the business. This is also why the Millenium,
>as well as others, are not sold through distributors, and also why we are
>currently seeing Eastern European ships on the Market. Without really going
>into pricing, the way Ed Slobod explained it to me, is that (at the time of
>him teling me this) if a product listed at say $100, the end sellers buys it
>for somewhere between $50-80 (or less) depending on volume, the Distributor
>buys it from the MFDer for approx $40-50, often at a lower price if there is
>volume, the manufacturer sells it for say $40, and with this , in order for
>them to make a profit has to make it (labor included) for $20. So in all,
>looking at the markup, the MFDer makes $20, the distributor makes $30-40,
>and the Hobby shop makes $20 (the numbers are close enough if you want to
>nit pic). Anyway, Ed said that the price out the door from the MFDer
>basically follows List - 50%of list - 10% of list - 2% of list, so out he
>door by the MFDer is $42. Nowadays, distributors want their purchase price
>to be lower than $42, since this allows them to make more profits. You have
>to realize that the distributor and the hobby shop have to do all the real
>marketing. You see why the Dist want to make buy and sell the product.
>
>You know all this because you are a marketer! For people like Hobby Lobby,
>etc, or Great Planes, they can be the distributor and end seller making the
>combined money allotment. For people like RnR, MFDers of the Millenium,
>they go directly so they make the entire $58 that would be for the dist's on
>top of their MFDing profits.
>
>But let us look at the time involved for manufacturing. Basically, the
>costs of making a plane or anything is tied up in LABOR. In the past 10
>years we have seen an explosion of salaries, look at Silicon Valley, Auto
>Mechanics and medical Doctors (I just love to have fun kidding you :) :) )
>Anyway, we see on the RCSE people buying 2 or three Milleniums (at nearly
>$900 a plane) when many years ago we would not have dreamed of buying a
>expnsive ship. Just recall the price of a Hobie Hawk in the mid 70's.
>There is more disposeable income and people are realizing that they would
>rather fly than build in order to "compete" with the big boys, like at
>Visalia. (This would be where I would suggest a class for only scratch
>designers, recall the builder of the model rule.)
>
>So let's look at manufacturing, and the current trend in molded ships from
>Eastern Europe. From what I have heard (and don't think I know this for a
>fact), they make 4 Milleniums/week, amongst their regular business product
>(the planes are a small side product), and it takes 4 men involved.
>Assuming $900/plane and a profit of $500/plane and all of that goes to the
>men (which it doesn't), they make and sell NET a max of $2000 which goes
>to each man. Do you expect people to work and survive for $500/week in the
>current economy? So when you look at Eastern Europe, They can. And they
>have all the CNC machinery left over from the big military projects, now
>just sitting there for some use.
>
>Now when we speak of modelers and how many there are, we often underestimate
>the builders because they are in the background. For example, look at the
>NBA and Michael Jordon. For every Mike, there are $50 in the NBA who are
>trying to be like Mike. (Parallel Joe, Daryl, etc to us at Visalia) And
>then there are the 200 from universities that try to make the NBA, then the
>1000 's at Universities trying to play for U's. then the 10,000's of High
>schoolers trying to make it, then the 10,000's of backyard B-ball players in
>scratch games. It is only when you see the scratch games that we realize
>that the number of people who have the potential to buy a product.
>
>So if 10,000 of an item are sold (out of 1000's of potential plans), that
>does not give the manufacturer much, but it contributes to the distributor
>who sells many of these items combined. The more they cost, the more the
>distributor can makes. It is a price point. The Dist/seller prices the
>planes etc so he can maximize his profit. The more product he can offer,
>the more he can make, while the MFDer can only increase his product line
>slowly due to labor time.
>
>So where and what products make the most??? It is the cheap, disposeable
>items required by ALL. That's why they make disposeable razors, toilet
>paper, and my favorite, plastic milk cartons, or paper soda cups. The more
>soda cups sold the more they make, and that is why they give you free
>refills. For modelers, take a look at Glo plug, and say Propellers. Years
>ago those wooded propellers were broken nearly all the time on landing.
>Think about how many of these were made and their cost.
>
>For my ScollSanders, they are disposeable (i.e. they get used up) . I
>beleive I have hit only 1-2% of the market. There is alot of potential.
>
>OK enuf of this rambling. Karlton would still be wearing his Good-Will
>pants if he were a manufacturer. As for me I have priced out my time to
>make a MHLG and I would be making less than $5/hr. So if someone makes
>product, they are working on slim margins and not making much. They do it
>because they love the sport.
>
>BTW, I was able to get a downpayment/credit for a 4-Runner based on the
>business, but it was close.
>
>BUT I still cannot buy a Millenium! And I can fly well enuf to compete
>against the big boys if I had one.
>
>My Best to Barbara.
>
>Thermals,
>
>Chris Adams
>lsf 348 Level 5 (#8)
>
>
>
>
>
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>
Mike Stump
[EMAIL PROTECTED]
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