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)
RCSE-List facilities provided by Model Airplane News. Send "subscribe" and
"unsubscribe" requests to [EMAIL PROTECTED]
RCSE-List facilities provided by Model Airplane News. Send "subscribe" and
"unsubscribe" requests to [EMAIL PROTECTED]
