The Amp Hour Electronics Podcast

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#17 – EE Movies, Part Rants and SPICE.

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  1. I’d like to point out that the OSHW draft is a *definition* of what open source hardware is, not a license, as Dave mentions in the show. From the page at http://freedomdefined.org/OSHW

    “This definition is intended to help provide guidelines for the development and evaluation of licenses for Open Source Hardware.”

  2. I’ve been looking at the business side of things…

    lets say you make a board that costs $20 to make (pcb and assembly). I’ve often heard you need to sell a product for 5x in order to account for expenses (sales, distribution, returns, advertising, etc). But $100 for my little gadget board, is crazy! At most, I think $40 (2x) is the reasonable amount that’s going for little hobby boards like these.

    So, then there’s places like seeedstudio, that will take orders, ship your boards directly to the customer, handle returns, etc. For this, they take 30% of the retail price. So if we assume a $40 selling price, your net profit is $8 per board. Thoughts on paying 30% for fulfillment? Is netting a 40% return ($20*.40 = $8), typical?

    Many of us are in the gadget hacker/maker space, so would love to hear any real world rule-of-thumb experiences on pricing a gadget, order fulfillment costs, etc. What are reasonable expectations?

    • When I went to the open hardware summit, both Ladyada and Chris Anderson stated the 40% rule. Anything they buy resell is 40% markup. So I think 40% on your own design is reasonable. Seeed studio makes money because of the cost of assembly there. It’s impressive but they’re likely also banking on capturing larger orders in the process.

      As for the real world stuff, you’ll have to wait for Dave to answer, my answer is all second hand.

    • The 5x order applies to big business, not to the hobbyist or midnight engineer with small overheads.
      Because:
      a) the midnight engineer is CRAZY to spend money advertising. It’s easy to get better advertising and exposure for free by way of blogs and other avenues.
      b) Sales and distribution cost nothing, you almost always charge the customer close to “at cost” for the postage and packaging.
      c) returns do happen but are very few, almost to the point of insignificance. Even less problem if you have a community that takes care of most support for you.

      In the direct hobby/kit business you don’t bother being in business unless you are making x2. So the $20 kit should retail for a minimum of $40 directly, otherwise you are wasting your time and working too cheap.
      But the problem is that 2x leaves you no margin for using resellers.
      In the consumer world resellers get typical 50% of the retail price for a lot of goods (the cut throat computer/phone industry is a big exception), so 30% for Seedstudio is very reasonable I think.

      For a $20 cost product I’d retail it at no less than $60. But of course it always depends on what the product is, any competition, and what people are willing to pay. It’s better to overprice something at the start and lower the price later if needed.
      Sparkfuns recent talk mentioned this factor. They didn’t really want to sell those dial-up phones, so priced them at a crazy $400 so no one would buy them. They sold like hot cakes.

      Remember, people still can’t do a one-off cheaper that what you can sell it it for, even with a huge mark-up. The NRE on the PCB is a killer.

      The reseller question is always a tough one. You make less profit per unit, but you spend a LOT less of your time in packing and shipping, and you potentially get bigger shop exposure. Shipping can be a real pain the arse for places like Australia when 95% of customers are based overseas, so each unit sent has to have a customs clearance. Shipping is a really really painful part of the kit business.

      Dave.

    • Why do you want to monetize your little hobby gadget board? I know, it is a current trend to monetize every social interaction and every individual activity, if possible. But there is nothing wrong with letting a hobby just being a hobby, without the stress of business.

      The moment you turn your hobby board into a business it is no longer hobby and you have business responsibilities. Like financing the manufacturing, ensuring shipping, satisfying the taxman, following the laws and regulations for small businesses, making sure you get paid and making sure you pay the bills.

      • Satisfaction of seeing other people use your project perhaps?
        Nothing wrong with it staying a hobby at all. But those that want to commercial their stuff can.
        Horses for courses, as always.
        Dave.

      • Um…”the land of eggrolls” are indeed your words, Chris. Mine was “the land of spring rolls”. The land of eggrolls is actually America, or worse, Canada.

        • Dang, foiled again! Ah well, I’ll take my deep fried just-about-anything and will congeal over here by myself, thank you very much! (with all apologies to the “land of the spring rolls”).

  4. In this episode, you two were wondering why so many devices crowd the 2.4 GHz area of the RF spectrum. It’s no accident.

    Microwave ovens use ~2.4 GHz because that’s the resonant frequency of water molecules. If microwave ovens used a different frequency, they would transfer energy to the food less efficiently.

    This fact also explains why the airwave licensing bodies worldwide have left 2.4 GHz open to anyone: signals of that frequency get absorbed by atmospheric moisture, so they don’t travel very far. That handicap is no problem for WiFi, since the humidity in a house isn’t enough to cause a significant problem over the 100 ft or so max radius for the radio.

    This is also why, when they designed WiFi’s city-wide cousin, WiMax, they used different frequencies.

    This fact might also explain why ~5 GHz is another free-for-all zone: the same deal again, only one octave up, so it’s a half-wave absorption instead of full-wave. I don’t really know; check with an RF engineer.

  5. Thanks for the comment on shutting down IEEE junk mail. I like IEEE, but I think of it as an insurance marketing organization with an electronics arm.

    Regarding nF, for no good reason I avoid them. It’s 1,000pF. The next order of magnitude is 0.01uF.