I mean yea...one is cow and elephant and one is thermoplastic...not even the same molecular species...Originally Posted by Kirk
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So, looking at RCS's Instagram, they showed a photo of an early prototype which was clearly printed on a PLA/Extrusion type 3D printer. The pre-production prototype shown is clearly made from a Selective Laser Sintering (SLS) print of one of the various Nylon products, Raven notes, accurately, that the SLS tech is ~10x the cost of the PLA tech. That is technically correct, a fairly high-end PLA printer is ~3k and a production ready SLS printer is ~30k ($27.8k for a Formlabs, according to a quote I got recently...). The SLS tech does produce a nicer product, higher quality, and stronger than PLA. It also is faster, uses less material (though the base material is more expensive), and breaks down a lot less often. Which means from a production point of view the upfront cost of the SLS is offset by limited downstream downtime and faster production times.
That all said...there is not $200 in material and labor in these holsters. The FormLabs SLS Nylon is ~600 bucks for 6kg of powder. I don't know the use amount to make one of these holsters, but if it takes a kg of powder (2.2 pounds) that's $100 of nylon powder per holster. The annuitized expense of the machine (30k) + power + man hours to run the machine does not equal an additional $100, it might get close and might be close enough that $200 is needed to yield a small profit. But, I have my doubts, for starters these machines, once properly set up can be run with minimal oversight, reducing man hours. I have a FormLabs printer in this room I am in right now and we regularly run it over night without observation. I can count number of failed prints on one hand with fingers left over in ~14months of weekly if not daily usage.
I would guess that these holsters take ~1/2kg of powder to print, meaning at most you're looking at $50 of raw material + annuitized machine + power + man hours + 25% profit margin and that's going to = $125. If it's this lower production number, you're looking at 100% profit margin at $200.
I know they have to annuitize the cost of multiple machines and material and upfront investment based on their initial production capacity estimates, but the long and short is - you need to have a realistic break even sales number and balance production capacity with expected sales numbers. If you over invest in production capacity up front that is failure to plan and manage appropriately.
Realistically, a product cost that clearly prioritizes profit is aimed to do one of the following:
1) rapidly increase production capacity with profit reinvestment
2) maximize financial yield on low volume production, when you have high up-front investment (basically make it so you don't lose your ass if you end up with excess production capacity)
3) Maximize profit yield - the end.
I cannot say which of these three scenarios is the main one behind the decision to price a product that is roughly a 100% profit margin...but power to them for having the balls to do it. And do it in an industry that regularly runs on ~8-18% margins...that's something.
My personal strategy would be a break-even of minor loss-lead approach on a limited initial production to get the product out if I thought it was going to change the game entirely. Followed by price increases that reflect modest profit and increased production capacity. I would have a 24-month timeline for expected profit return, because if it really is that awesome, initial profits will have to be reinvested in growing production capacity. Of course, this presumes that I have the financial backing necessary to sustain if profit return window is extended. Personally, only if I had invested everything in a go-for-broke strategy would I put profit margins high so high that they might inhibit sales volume growth.
If I was unsure if a product would hit, I'd be modest in my initial up-front investment and capacity - so I could market price to a moderate profit margin and relatively low production volume on break even.
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This is all a really really long way of saying this:
The cost of this holster is 2x the cost of material and labor included. And yes I can approximate the costs as can anyone with an internet connection. And that means RCS has probably over-invested in this product and has not so great confidence in it. And/or it means RCS has some other financial woes and are banking on this going big or they are going home.
Regardless, the combination of RCS's lack of innovation recently + their very odd vehement defense of their design via social media + the dearth of technical details of the product + the high pricing + the confidence man type gamesmanship in their communications and product release = Low confidence on my, the consumer's, part of this situation.
I know some folks will say that's a lot of conjecture on my part and that's a fair criticism, I don't know what I don't know about RCS's business plan and solvency. What I do know is...I have watched a lot of companies go under and suffer big losses on their balance sheets when gambling on a product being the next it. They all generally are incredibly defensive about it and their behavior and attitudes are generally indicative of that failure before it is apparent to the outside.
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