How much is that little pedal in the window?

[Peter Snowberg]

Hi all,

I've been making a living with computers and electronics most of my life and since 1997 I've been working toward music, trying to get away from embedded data acquisition and supporting Windoze machines.

In the process of doing this it's important to know how much effort is required to pay the rent. Some equations work out, while others take more resources than are available.

I've done a ton of calculations on paper, wearing my calculator keys to the point where the numbers are going away. At one point I said to myself that there had to be better way. PHP/JavaScript/HTML is that way.

I built a projection calculator around a project I started a couple years ago to sell CD-ROMs, but then adapted it to boutique pedal building.

After reading a bunch of posts here accusing pedal builders of charging too much for their wares, and lots of hard thought.... I have decided to make the use of this tool available for the users of this forum.... at least for a while.

If you want to build pedals for a living, it's going to take a LOT of work. Please be prepared for what may be some sobering data.

You will need to know your tax rate and how to apply that to the info returned. The lower right hand corner provides options for marking income levels below and/or above a set amount so you can see where that tax rate applies more easily.

The example data is just that.... EXAMPLE DATA! It is not connected with reality or what I'm going to put on the market. Please keep in mind that the numbers and color scales are based on keeping a company running, not for income to buy pizza once in a while.

Use it in good health.

Old Projection Calculator link removed. Sorry.

Take care and please let me know what you think (and if you spot any errors),
-Peter

[aron]

Strange. I cannot get to that page right now.

10:35PM HST 2/10/04

[troubledtom]

i can't see it. i'd love to try it.
  thanx,
      - tom pollock

[Marcos - Munky]

Me too, I like to take a look. Could you send it to my e-mail?

[Peter Snowberg]

Sorry everyone. I don't know what the hangup is, but this is the same machine the "Where are you?" map was hosted on. I'm working on it. It worked until about 36 hours ago and then my server log shows nothing more.

I'll let you know when I have it working.

Take care,
-Peter

[Peter Snowberg]

I think it's working again.

....must have been Elvis. :lol:

[fernmeister]

thanks for making the app available!  

it is sobering, as you say, but it did raise a few questions for me.  personally I've never been tempted to go into making effects as a fulltime thing.  I've been tinkering with them for a while and the very small number of those I have sold over time have really only been to friends on a parts plus a bottle of wine formula.

what your app immedietly highlights is the need to deal with wholesale v retail issues and distribution.  I think it shows clearly the effect that good distribution can have on a business model.

however  I wonder how this all works out in the real worl in terms of store sles versus online sales.  certainly some makers have established the sore of their business selling "direct-to-public."  robbert keeley comes to mind as one who established his business this way and made the transition to fulltime before having any real distribution network.  i don't know, but I would guess a fair amount of the early profit was invested back into the business as well.  mind you robert always started with commercially realistic prices and there are lots of horror stories of people starting with low prices, then when the business grows they find they have to increase prices to make the thing work and boom, they get a lot of bad comment on the internet forums.

i guess that's my rambling way of asking, how does direct sales through e-commerce effect the model?

[Marcos - Munky]

Cool!!!. Hey Peter, what about to do a downloadable version of it?

[Erik]

Yes... but if you can somehow get 235 stores to sell 15 of your pedals a day, using your default production/revenue data, you would be sitting pretty with $47+ million a year. Or you could simply sell one pedal a year for 47 million. I am not quite sure which would be tougher.

[moosapotamus]

Wow! Nice app. Peter. Thought provoking, too. Thanks for posting.

I'd be really interested to hear comments from some of the commercial builders here.  

~ Charlie

[Peter Snowberg]

Thanks everybody for the replies and all the PMs!

....
what your app immediately highlights is the need to deal with wholesale v retail issues and distribution.  I think it shows clearly the effect that good distribution can have on a business model.
......
i guess that's my rambling way of asking, how does direct sales through e-commerce effect the model?

Bingo!

As with most sales of anything, quantity is everything. At some point it becomes feasible to sell and below that, you have to do it for kicks. The question for me has always been where this dividing point lies. Of course since it's not a specific number, but rather an algorithmic relationship, that's a hard question to answer.

I would love to know more about the qualities that on-line sales outlets deal with, but I've not done any of that research yet. I don't think it really affects much other than the shelf price being much lower than wholesale+60%. Everything else remains the same.

Direct sales is another situation though. You can look at the wholesale price as your retail and now you suddenly have lots of room to increase the "pad" value.

Yes... but if you can somehow get 235 stores to sell 15 of your pedals a day, using your default production/revenue data, you would be sitting pretty with $47+ million a year. Or you could simply sell one pedal a year for 47 million. I am not quite sure which would be tougher.

:lol: I wonder what a $47,000,000 pedal would look like? It better have more than two knobs on it! :mrgreen:

The lower right hand corner of the graph isn't much use I will freely admit, but it has to be there to support the existence of the other corners. If you click on the scale buttons at the bottom, you can view some even more ridiculous numbers.


A big THANK YOU to Marcos-Munky who has already done some of the Portuguese translation !

I would like to make this thing multi-lingual and if anybody else would be interested in doing a translation to their native language, please let me know.

I will continue to improve and add to this code. All suggestions are welcome.

Thanks again,
-Peter

[Paul Perry (Frostwave)]

I think one very strong factor pushing pedal prices up is this: if a pedal has (say) $100 parts & labor, then if it is sold at $140, you make $40, but if you sell it at $180, you have put the pedal price up by less tan 30%, but you have DOUBLED the profit, Or,looking another way, you only need to sell HALF as many pedals at $180 to make the same money as at $140. plus, you only have half as many potential problems! (this last point is very important as you scale up... if you are going into significant quantities, then if you have problems with even only a small % of customers, eventually ALL your time & more will be consumed!)

[Triffid]

I don't see why you would include labor into the production cost of your pedal if your are making it yourself.  In fact, the labor IS your profit (not counting the normal costs of business).  If a pedal costs you $35 dollars in parts to build, takes you a net 4 hours to build it and you are lucky enough to sell it for $125... then your labor was worth $22.5 an hour right?  I am excluding of course the cost of design, advertising, returns, and all the other things that go along with a business.

[seanthomas46]

parts for one silicon PNP fuzz = 25
10/hr. 1 laborers, 1 hour (being very modest) for one built PNP fuzz = 10
+1 hour tailoring finished proto PNP fuzz = 30 (or 10 time in time deduction if you do it alone which most boutiquers do)
less sum: 65
misc. cost = 5
total = 70 a fuzz, approx. 80 germanium fuzz.  (keep in mind with 3 workers, plus overseer/builder himself{4total} 1 hour could produce 2-3 proto completed unfinished fuzzes however add half where minus expenditures taken due to material repurchase)
  Boutique asking for a PNP fuzz:  approx. 170-180.
Actual Approx. Price: 70
Less Profit: 90
Net Profit:  30
Earn 30 per pedal if 3 laborers working including self.
In a 3 labor environment.  Shelf rate would be 20 hours a week producing 60 pedals.  Average sell for company with 3 workers, 2 per day.   
60 multiplied by 7 business days is 420
If consistent, in 30 days, less profit: 12,600 (a month) divided by 4 is 3,150 each worker including self.
Subtract website maintenance and misc. 100 month.
Each head net profit: approx. 3,000
Not bad for a side business consisting of only 20 hours per week. 

[wampcat1]

I don't see why you would include labor into the production cost of your pedal if your are making it yourself.  In fact, the labor IS your profit (not counting the normal costs of business).  If a pedal costs you $35 dollars in parts to build, takes you a net 4 hours to build it and you are lucky enough to sell it for $125... then your labor was worth $22.5 an hour right?  I am excluding of course the cost of design, advertising, returns, and all the other things that go along with a business.

Yes and no. If you are building a few pedals for friends, then yes. If you are trying to grow a business, then no - your money is seperate from your business profits.

Take care,
Brian

[wampcat1]

parts for one silicon PNP fuzz = 25
10/hr. 1 laborers, 1 hour (being very modest) for one built PNP fuzz = 10
+1 hour tailoring finished proto PNP fuzz = 30 (or 10 time in time deduction if you do it alone which most boutiquers do)
less sum: 65
misc. cost = 5
total = 70 a fuzz, approx. 80 germanium fuzz.  (keep in mind with 3 workers, plus overseer/builder himself{4total} 1 hour could produce 2-3 proto completed unfinished fuzzes however add half where minus expenditures taken due to material repurchase)
  Boutique asking for a PNP fuzz:  approx. 170-180.
Actual Approx. Price: 70
Less Profit: 90
Net Profit:  30
Earn 30 per pedal if 3 laborers working including self.
In a 3 labor environment.  Shelf rate would be 20 hours a week producing 60 pedals.  Average sell for company with 3 workers, 2 per day.   
60 multiplied by 7 business days is 420
If consistent, in 30 days, less profit: 12,600 (a month) divided by 4 is 3,150 each worker including self.
Subtract website maintenance and misc. 100 month.
Each head net profit: approx. 3,000
Not bad for a side business consisting of only 20 hours per week. 

What you aren't taking into account is this: How are you going to sell them? Who's going to market them? Your not just going to build a website and people aren't 'magically' going to find you and purchase your stuff. Why should they? There are 100 more pedal builders around the corner who do just as nice of work and some are cheaper, some are more expensive.

[A.S.P.]

http://www.elixant.com/~stompbox/smfforum/index.php?topic=23476.0
http://www.elixant.com/~stompbox/smfforum/index.php?topic=31577.0
http://www.elixant.com/~stompbox/smfforum/index.php?topic=14742.0
http://www.elixant.com/~stompbox/smfforum/index.php?topic=40994.0
just a few...

[flibbergibbin]

I'd love to check it out but it seems Elvis is on the loose again.

[theundeadelvis]

 

[Mark Hammer]

I can't load it up at the moment, but I feel pretty confident in saying - sight unseen - that what is not likely built into the equations is the sustainability factor.  All calculations assume that: a) one's product is as perpetually and continuously desirable as milk, eggs, and bread, and b) all inventory purchased will be completely used up should desirability NOT be perpetual.

This is, of course, why Zachary Vex is so justifiably protective of the Fuzz Factory.  The long-term marketability of any of the sequencer-based pedals (Seek-Trem, Seek-wah, Ooh-wah, Ring-tone, etc) or the Probe series is open to question.  They're obviously not "bad" products, but I'm sure even the Z-man himself has only a sketchy idea of how many units of these he might be able to move over the next 5 years.  In contrast, the FF has a known track record by now, and is enough of a cash cow that he can take noble chances on the other things.

I keep saying "You can't get rich off a fuzzbox", and I still mean it.  All the calculations Peter has so diligently worked out are probably meaningful if you know how to run a small business efficiently and there is sustained demand for your product.  How whacked out the pedal sounds is moot if those other things aren't in place.  As Zach has recounted, and as others have recounted in detail, if you add up all the income forfeiture and "entrepreneurial evolution costs" that precedes establishment of what looks to be a successful small business on paper, it takes longer than you'd think on the basis of the calculations you KNOW about before you start to feel like you're making money. 

I accept that: a) SOMEBODY is making money out there so it CAN be done, and b) there are plenty of folks for whom just doing it, whether it puts them behind the wheel of a Lamborghini or not, has value in itself.  Ultimately, though, it boils down to whether you put yourself into a situation where you can end up hating and resenting an aspect/segment of your life that you used to love.  So, this being the pedal business - one of the most fickle businesses there is - you have to ask yourself, "do I feel lucky?".  So, do you feel lucky, punk?