Friday, November 19, 2010

I am the great and powerful OZ!

Many people ask why is this so expensive. The short answer is that nothing about making resin models is quick or cheap. The long answer requires a more in depth look at the costs involved. Unlike many manufacturers, I do not feel it is constructive to dance around this question. An honest question deserves an honest answer.

So let us pull back the wizards curtain and see what hides behind...


Pricing my models is a subject that often causes me a great deal of discomfort. Every kit, every release begs the question what is a fair price? What do I need to charge to keep the doors open and continue making things I, and hopefully others enjoy. While understanding not every model will be a spectacular hit, what is a reasonable number of models you should expect to sell to amortize your upfront costs?

Now we look at the ugly numbers. I already own the equipment so I will not count that in the total but I show them here for general reference. Also, keep in mind this rough overview is for a rather large and complicated model with over 32 molds and 136 parts. Although the costs are not accurate to the penny, they are honest reflections of the true costs. There are numerous other costs that will not reflected in this break down, such as overhead, web development, problems with molds, etc. These costs likely reflect another 3% to 5% reduction in true profit.

Initial equipment investment: (This cost is not reflected in the totals below)
Compressor, Pressure pots, Vacuum pump, Vacuum chamber, assorted tools, mixing containers, etc
Rough estimate- $1800.00

Initial materials investment:
Model print cost, Initial molds (RTV Silicone cost), Mold boxes, clay and other tools, Resin for mold master.
Rough estimate- $3850.00

Cost for each model produced:
Assuming a conservative25 pulls per mold, before mold needs replacing. Estimate for resin, rubber and packaging.
Rough estimate-$89.00

Cost for casting service:
Assuming the molds are made and supplied by me.
Rough Estimate-$75.00?? (This number is still unresolved)
Shipping costs back to me from caster-$4.00

Credit card transaction fees:
3% to 6.5% (average 4.75% of $350.00 retail) $16.62

TOTAL  PER KIT COST TO PRODUCE AND SELL A SINGLE MODEL- $185.00

RETAIL PRICE PER KIT- $350.00

Taxes on profit:
 $65.00 (Uncle Sam and California demand their share of my hard work)

 TOTAL NET PROFIT- $100.00

DreamForge-Games company profit- $50.00 per kit
Costs of initial investment, $3850.00. (First true profit after 77 kits have been sold)

My profit per kit- $50.00 per kit
Target of $15.00 an hour for my time. CAD Modeling, Benching, Mold Making. Four hundred and sixty hours invested, and an additional ninety hours for the three mold change outs needed to meet the 77 total kits sold to square up the initial model/materials costs.
Total dollar cost of my time $8,250. (First true profit after 165 kits have been sold)

What do I make per hour, if we try to zero my hourly rate at the 77 kits sold, based on the initial investment costs of the model and materials. I net $6.99 an hour for my time…Hmmmm…

Add the taxes back into the total that we removed earlier and were up to a “respectable?” $9.44 per hour actual working wage. This begs the question, if you possessed the creativity and the skills set in CAD and mold/model production, would you work for $9.44 an hour with no health plan.  I am not crying poor me, this work is something I love doing or I would not be doing it.

I hope that this release is a smashing success and I sell hundreds…  This would improve the look of my financials greatly. I would much prefer to amortize my investment to the first 40 or 50 kits sold, and on smaller less expensive models, this is always my target.

For the immediate future, I will need to cast these in house while I search for a suitable service provider. This will increase my profit margin but will slow the development of new models and severely limit the number of kits available to my customers. With this in mind, moving production out of house is a very high priority. If the contract casters services are far greater than expected, I will need to increase the price to reflect the additional costs.

Things being what they are, I feel it is a fair price for my customers and a fair price for the product I deliver. I hope that you feel the same and I hope that I helped to dispel the age-old question “why is the price so damn high?!”

10 comments:

  1. Keep at it. The price is a good deal, especially considering the massive amount of work involved.

    Good luck.

    Best,
    JBR

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  2. You could also look into selling piece by piece for some items such as the head. A lower price is going to give you more customers who dont have that money and are just looking for some conversion stuff. Also selling things like miscasts cheaper and by piece for use as terrain or something may also help to increase your profits.

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  3. Good on you Mark. Great post as it demonstrates who wonders about the cost of our models or even whether they could potentially go into business for themselves that at the end of the day it's about having a respectable living wage for the hours put in.

    I weighed it up myself years ago and found that whilst I really wanted to have my own business, my true earnings per hour put in would be 10% of what I would earn as a corporate wage slave.

    Would I be any happier? Questionable. Really respect you for being so honest and informative.

    Cheers
    Mark

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  4. Wow, I was sold on the pictures alone. At fist I was like 'how much????!!!' but after reading your breakdown of cost I have gained a better understanding of the pricing stucture and now have a new respect for not only yourself but any mini/resin model producer. I'm sure places like forgeworld have reduced costs even more than yourself but still this does explain why it costs as much as it does. Now getting back to the kit. I assume this is on the same scale as wolf hound titan. Not that it matters as I will be purchasing one for sure. To be used as a Iron Warrior super heavy. In which case how hard would it be to convert one of these? Can resin be cut without power tools?
    Anyway thanks for making this, I will placing my order around feb next year, hope you ship to the U.K?

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  5. Thanks guys!

    Tylermenez:
    It may be a pipe dream, but I hope not to have a lot of miscasts. Ultimately I would like to have a build-a-mech process that will allow you to pick and choose components. Weapons will be available separately but individual components may not be, as many of the molds are family molds containing multiple components to a single area.

    rossy.hinchley:
    Forgeworld likely buys its rubber and resin in bulk, gaining a 20% or better discount. But they have much higher overhead costs than me, so I am hesitant to judge them without knowing their profit margin.

    Resin is a bit softer than plastic and is fairly easy to work with. If you build a lot of plastic kits you will have the basic skills needed. Using an X-Acto knife with the saw edge will make your life much easier when it comes to cutting. I have been writing up a document, Working With Resin Models. This will give you a tools list as well as the very crucial pre-prep needed and list of appropriate glues to use with your resin model.

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  6. heck, as I'm making a living from resin casting hobby kits all I can say is that you don't charge too much. In fact I'd say you should charge more, especially considering how cool those designs are :) .

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  7. Well, let's just release this baby to begin with. I will buy one, and make sure to field it and advertise it as much as possible.

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  8. amazing, its refreshing to have actual numbers to hang the hat on.

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  9. Hello,

    What a great model !!

    From the engineering point of view, it is a great challenge that you have taken up, the pricing is fair, imo.

    For all of this :"Félicitations et bon courage."

    I personally use models from all ranges together, and new Titans like this one will be absolutely awesome in armies, whatever they are.

    You shall add a discrete ruler on the side of the pictures, as many people refer to it as paladin knights titans... but it is actually 25 cm high ! A real scout titan.

    Thanks for making all this possible,

    Lionel

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  10. What great insight into the industry & an easy way to appreciate the effort that goes into the model.
    I wish you much success.

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