Predatory Profit Margins

Let me propose a hypothesis, and you may call me crazy. Many have. But I'd say, that no second generation open source product is worth > 3-10 times material cost. Now, this isn't the standard operating procedure for post-industrial America, where people are happy to pay obscene amounts of money for "intellectual" property.

Although I admit, One's time and effort is worth as much as solid products. However, when One's super-ego is attached to an open source product in perpetuity, and yes I did learn that word from Kevin O'Leary, then that product can not be deemed as a second generation open source product.

What do I mean by second generation open source product? I believe that any generic product, no matter how complex, should not be priced on the basis of design. It should be based on material cost. The work of design is absorbed already. The business model should be like that of any machining company that bases price on material cost, or a retail business that buys product and sells it at a markup.

I see companies charging $20 for a $0.50 piece of metal and I wonder; How can they wave the Open Source flag?

Edited 1 time(s). Last edit at 01/30/2014 10:49PM by ohioplastics.

Maybe if I knew exactly what product you were talking about, I would understand your point. But without that information, it seems you're completely disregarding operating costs. Sitting in front of a 3D printer at the dinner table for too long might disillusion one to what goes on in a manufacturing and/or a business environment. For example if you weighed a model airplane engine block, you'd find it's probably not worth more than $5 in aluminum. So should it cost no more than $15-$50 to purchase? Give a skilled machinist $15 and that ought to be enough for him to mount the block in a CNC machine, but not turn it on. Go ahead and give him the remaining $35, and you'd probably get a file loaded (we won't consider the hundreds of hours of design time, since it's second gen open source), transferred to the CNC, cutting tools set up and spinning, and a smoke break. Then someone has to pay for the $100K CNC machine, raw materials, shipping, software, rent, utilities, and someone to keep track of all the numbers.

The beautiful thing about all of this is that you can put your money where your mouth is, no excuses not to. It's open source, and we have a free market. If you can make something that already designed by someone else and sell it for 3X-10X the cost of raw materials, try it. There is literally nothing to stop you.

I posit that there is not and cannot be such a thing as a "predatory profit margin" on anything that is not directly tied to human life (ex. food, medical care). The fact that the term is being used to describe an OPEN SOURCE product is just silly. Supply and demand. If you want it bad enough to buy it for the asking price, then you consent to being charged that; there is no room for "predatory" in that sentence. If you want it, but not bad enough to buy it for the asking price, then nobody is there to enforce you to buy it (again, nothing predatory). If you want it, not bad enough to pay for it, but bad enough to make it, then make it.

Something being Open Source has nothing to do with the retail cost. Open Source is simply that; the product's source and plans are open for anyone to use.

Plus on top of the material cost, like stantor said, there are overhead expenses, labor, etc. All that goes into the cost of the product, along with profit margin.

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greghoge.com

HUGE 3D PRINTER PARTS SALE!!!

I can't comment on my products due to the rules of the forum, however I can say that I'm non-union and that I do not take smoke breaks. Not sure if that's the reason why products are so expensive, but the beauty of this product is that it's not rocket science and it's not proprietary. It's a low overhead machining operation. I know that the ability to sell a cheap products for insane markups is there. But where do we draw the line?

As Howie Chizek (may he RIP) and Jerry Maguire said, we need to make less money. Sometimes capitalism gets the best of us. 3d printing needs to be demystified, even more than it has been through great tutorials and guides on reprap. These products need to get into everyones hands. Not just the upper class. The only way to do that is through honest and fair pricing.

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ohioplastics
These products need to get into everyones hands. Not just the upper class. The only way to do that is through honest and fair pricing.

What if somehow the 3D printer could print all of its own components? Then anyone who had one could print another one for a friend... It would have to be some kind of... some kind of... self-replicating 3D printer.

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MattMoses
What if somehow the 3D printer could print all of its own components? Then anyone who had one could print another one for a friend... It would have to be some kind of... some kind of... self-replicating 3D printer.

If only there was a like button on these forums

My objective is to bring 3d printing to the general populous to improve living standards, not to fulfill some college professor's wet dream. Mass produced parts will always be cheaper than 3d printed ones. The ability to produce parts for another 3d printer is gravy.

It's quite simple. If someone is charging outrageous prices for something open source, more than likely someone else will see the opportunity and undercut them. The one charging outragous prices will probably need to adjust their prices or go bust. When you mix branding into it, all bets are off. People will pay anything for crap with a "cool" brand on it.
/Andreas

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ohioplastics
Let me propose a hypothesis, and you may call me crazy. Many have. But I'd say, that no second generation open source product is worth > 3-10 times material cost. Now, this isn't the standard operating procedure for post-industrial America, where people are happy to pay obscene amounts of money for "intellectual" property.

Although I admit, One's time and effort is worth as much as solid products. However, when One's super-ego is attached to an open source product in perpetuity, and yes I did learn that word from Kevin O'Leary, then that product can not be deemed as a second generation open source product.

What do I mean by second generation open source product? I believe that any generic product, no matter how complex, should not be priced on the basis of design. It should be based on material cost. The work of design is absorbed already. The business model should be like that of any machining company that bases price on material cost, or a retail business that buys product and sells it at a markup.

I see companies charging $20 for a $0.50 piece of metal and I wonder; How can they wave the Open Source flag?

i'm sorry but .. seriously?

i'm so offended by this i had to register and reply, have you got any grip at all on the reality of producing anything you intend to sell? oh hang on you are selling somthing, i clicked the ebay link in your signature and was greeted by hotend stuff you are selling on ebay. going with somthing i'm most familiar with you have nozzles there for $2.99 thats cheap

looking at it in the photo it measures what 15mm lets say 20mm for the sake of calculation
looking at onlinemetals.com your material price is around $2 a foot out of that you would get around 15 x 20mm slugs
15 / $2 = $0.13 cents but your selling them on ebay for much more than that (over 20 times more )
just to be fair we'll quadruple the material cost because you might be paying slightly more than $2 which brings it to $0.52
which is roughly 1/5th of what you sell the nozzles for

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ohioplastics
How can they wave the Open Source flag?

lets turn this around back on you, "how can you wave the opensource flag?" looking at your thingiverse entry for the Jhead-lite
and comparing its sources to what other hotend producers have taken the time to put up it lacks a lot of information eg the most basic dimensions theres a bit more information in the reprap.org wiki but not much more,

and why Jhead-lite what are you doing riding on the jhead's good name or somthing, i'm sure the developer of that is thrilled

Edited 1 time(s). Last edit at 01/31/2014 06:50AM by kitkatkurl.

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kitkatkurl
i'm sorry but .. seriously?

i'm so offended by this i had to register and reply, have you got any grip at all on the reality of producing anything you intend to sell? oh hang on you are selling somthing, i clicked the ebay link in your signature and was greeted by hotend stuff you are selling on ebay

Holy carp, how did I miss that? Well, I can say one thing; I've never advertising like this before. Trolling for business. Or, trollling for the sake of business. Or how about let's call it "Predatory veiled advertrolling" Whatever you call it, it's both trolling and advertising, and it rubs the wrong way twice. You can bet I'll steer clear of anything you're selling.

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strantor
You can bet I'll steer clear of anything you're selling.

+1

Edited 1 time(s). Last edit at 01/31/2014 10:12AM by greenman100.

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strantor
Holy carp, how did I miss that? Well, I can say one thing; I've never advertising like this before. Trolling for business. Or, trollling for the sake of business. Or how about let's call it "Predatory veiled advertrolling" Whatever you call it, it's both trolling and advertising, and it rubs the wrong way twice. You can bet I'll steer clear of anything you're selling.

I also have a kick butt mission statement! I just found out how to do hyperlinks. Hey I don't understand the rules either. Your supposed to use a signature but you can't advertise or swear. That's all I know. I have deep beliefs and if you disagree I understand. But, don't call it trolling for business. I think people should get in the garage and make their own crap. But for those who can't, products should be affordable and ubiquitous.

After reading this, let me give a different perspective. Just like everyone else, when I first read the initial post I was thinking "what is he getting at?". I thought he was talking about printers in general. Of which, IMHO, they are hardly 500% markup from material.

Anyway, after seeing his Ebay stuff I can get where he is coming from. He sells a slightly different J-head for $25, or $17 as a kit. Most J-heads are $30-$60 on Ebay. I can get why he is passionate about pricing. And he is doing something about it. So before everyone keeps flaming him tirelessly, take a look at what he is trying to say. Of course, if he would have clarified what he was talking about it would have come off alot better.

Wow, good job I had my speakers turned up to 11, otherwise I would not have been able to fully appreciate your "Emission Statement"

Anyway, ohioplastics acts like a troll but I am not sure he intends to. I think he is a bit more like a bull in the china shop, it's the way he comes across.

I am fully behind Open Source, all I ask is that people don't try to take ideas out of the public domain by patents or other restrictions, or try to pass off products as "Open Source" when they are not.

But Open Source means free as in free speech, not free as in free beer. So people can charge whatever they like for delivering actual products, you just can't trade on exclusive access to IP, because anyone else can come and sell the exact same thing. That is a problem for a lot of businesses who sell cheap junk + heavily advertised brand name (Coca Cola etc..).

In a free market though, the price will trend towards the cost of the lowest cost producer, but not lower. That is a feature of free market economics.

Not every one has a garage, not even all Americans.

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What is Open Source?
What is Open Source Hardware?
Open Source in a nutshell: the Four Freedoms
CC BY-NC is not an Open Source license

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Hazer
After reading this, let me give a different perspective. Just like everyone else, when I first read the initial post I was thinking "what is he getting at?". I thought he was talking about printers in general. Of which, IMHO, they are hardly 500% markup from material.

Anyway, after seeing his Ebay stuff I can get where he is coming from. He sells a slightly different J-head for $25, or $17 as a kit. Most J-heads are $30-$60 on Ebay. I can get why he is passionate about pricing. And he is doing something about it. So before everyone keeps flaming him tirelessly, take a look at what he is trying to say. Of course, if he would have clarified what he was talking about it would have come off alot better.

So basically he is advertising his low prices in the guise of "discussion topic". Sneaky!

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What is Open Source?
What is Open Source Hardware?
Open Source in a nutshell: the Four Freedoms
CC BY-NC is not an Open Source license

If the price a vendor puts on a product is the price that the customer is willing to pay... what's the problem? both parties are happy

I agree, this reeks of sly advertising. So it would seem he has questionable morels himself.

PTFE only hot ends always warp and fail. This is why most are something else with a PTFE lining.

Yes it s cheap, but you will end up having to replace it, in the long run costing you more.

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Dust
So it would seem he has questionable morels himself.

Hopefully they're tasty morels.

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- akhlut

Just remember - Iterate, Iterate, Iterate!

[myhomelessmind.blogspot.com]

Ohioplastics you would benefit from some basic business and manufacturing classes. At a minimum you should consider reading a few books. It is obvious that you sell your hotend as a side business and do not rely on your sales to survive. I don't have a problem with that, in fact I think it's great. It doesn't, however, give you any insight into a real full time business and the related costs it incurs to survive. If you were surviving on your business alone you would understand things like the cost of labor and overhead. Businesses have to pay for licences, electricity, machinery, heating, cooling, storage, security, phone and internet all before they even have a product. They also have to pay their workers. This is true even if there is only one person in the whole company they get a labor rate. A lot of times that one person works for pennies just so their company survives. The design of the product, even when designed in house, is only a fraction of the total costs involved.


I think that any SME or individual that is making open source products should get fair market value for their product and shouldn't be undercut.


Here is what I propose (only tangentially related); Tipping should become a customary practice in open source. Here is how I propose it works; if you sell something based on someone elses open source plans you should consider giving a small tip to the designer of the plans if you can afford to. Individuals and new companies who can afford to would not be expected to. Established, profitable individuals and companies should consider tipping the designer 1-2% of profit (not revenue). I have been thinking long and hard about drawing up a document stating as such but I'm not sure i'm 100% behind the idea myself just yet. The problems I see - who gets the tip on a derivative work? Split it evenly among all involved? Give it just to the originator? If you made the derivative does that change things? How do you transfer this money? Is this an asset or liability on the books? etc.

The open source products I currently sell are sourced directly from the original designer/manufacturer this way they get compensated. I also match their prices as that is the value of the product.

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I feel like the fat kid in Moneyball trying to explain how overrated Johny Damon is. I don't post to advertise. I come to stick my middle finger up to an industry that inflates it's products' true cost, like Prusa and Lolzbot. $100, SHAME. And, because you can only stand at a lathe for so many hours before you need mental stimulation or else you go kind of crazy...

Wow, you still got a grudge against Prusa. You should just let it go man!

Of course, there is no such thing as "true cost", it is all relative. Supply and demand.

I disagree with the idea of tipping as a % of sales in Open Source as a customary practice. It is too close to paying a royalty for the use of IP, which is the exact opposite intention of Open Source. If you have some developers being paid and others not paid, it is a recipe for unpleasantness. The whole point of Open Source is to build on and contribute to public domain work, it is generally quite impossible to decide who among the contributors deserves a particular share. It is a bad road to go down.

The way to "pay" for the use of Open Source is to contribute IP back to the public domain, not cash. You can contribute by generating Open Source IP directly, or funding developers to generate Open Source IP.

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What is Open Source?
What is Open Source Hardware?
Open Source in a nutshell: the Four Freedoms
CC BY-NC is not an Open Source license

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bobc
Wow, you still got a grudge against Prusa. You should just let it go man!

Of course, there is no such thing as "true cost", it is all relative. Supply and demand.

I disagree with the idea of tipping as a % of sales in Open Source as a customary practice. It is too close to paying a royalty for the use of IP, which is the exact opposite intention of Open Source. If you have some developers being paid and others not paid, it is a recipe for unpleasantness. The whole point of Open Source is to build on and contribute to public domain work, it is generally quite impossible to decide who among the contributors deserves a particular share. It is a bad road to go down.

The way to "pay" for the use of Open Source is to contribute IP back to the public domain, not cash. You can contribute by generating Open Source IP directly, or funding developers to generate Open Source IP.

Some prices may be inflated, they may not be, there is no way to know unless it's your own company. If you think they are why don't you just work hard at outselling them and beat them in the marketplace?

Bobc thanks for the input. Like I said it's not something I am 100% decided on. I'm not sure I have examined it from all angles yet and would like to hear some other viewpoints. I think I might start another thread about it as its OT but I'm curious what everyone things on the idea. Do you mind if I quote you in as an alternative viewpoint if I make a post?

Edited 3 time(s). Last edit at 01/31/2014 10:34PM by jzatopa.

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WWW.ZATOPA.COM - Your Place for high quality 3D Printing Filament and accessories

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ohioplastics
I feel like the fat kid in Moneyball trying to explain how overrated Johny Damon is. I don't post to advertise. I come to stick my middle finger up to an industry that inflates it's products' true cost, like Prusa and Lolzbot. $100, SHAME. And, because you can only stand at a lathe for so many hours before you need mental stimulation or else you go kind of crazy...

Engineering is free eh?

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tjb1


Engineering is free eh?

In open-source, it is.

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- akhlut

Just remember - Iterate, Iterate, Iterate!

[myhomelessmind.blogspot.com]

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Hazer
After reading this, let me give a different perspective. [...] after seeing his Ebay stuff I can get where he is coming from. He sells a slightly different J-head for $25, or $17 as a kit. Most J-heads are $30-$60 on Ebay. I can get why he is passionate about pricing. And he is doing something about it. So before everyone keeps flaming him tirelessly, take a look at what he is trying to say. Of course, if he would have clarified what he was talking about it would have come off alot better.

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bobc
[...] ohioplastics acts like a troll but I am not sure he intends to. I think he is a bit more like a bull in the china shop, it's the way he comes across

Hard to argue with these points. I should give credit where credit is due.

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strantor
The beautiful thing about all of this is that you can put your money where your mouth is, no excuses not to. It's open source, and we have a free market. If you can make something that already designed by someone else and sell it for 3X-10X the cost of raw materials, try it. There is literally nothing to stop you.

I quote myself, and he's doing exactly what I said. Props for that, ohioplastics!

I guess I was just a little put off by this thread, wherein he ripped someone else to pieces on the basis of his accusation of sly data mining, and here he is (still, IMO) doing a very similar thing.

But whatever, I'll live and let live. I shouldn't let myself get so excited about such trivial things. I need to work on that.

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ohioplastics
I feel like the fat kid in Moneyball trying to explain how overrated Johny Damon is. I don't post to advertise. I come to stick my middle finger up to an industry that inflates it's products' true cost, like Prusa and Lolzbot. $100, SHAME. And, because you can only stand at a lathe for so many hours before you need mental stimulation or else you go kind of crazy...

you offer an alternative albeit flawed in so many ways and false in terms of economy unless is it as reliable as other slightly more expensive hotends, which from what i've read it isn't and even in your own thingiverse link you have a link to a makerbot article regarding oil and pla,

looking at your post history you seem to ignore the "hard" questions and nearly everything you comment on is in some sort of negative light instead posting meaningless opinionated crap like whats in the quote above, you make your arguments based on opinion and very little fact if any, you don't seem to be much better than the jhead cloneshops making bad jheads who can't even follow the drawings well enough the get the number of slots right!

at what point did opensource go hand in hand with non-profit? what do you think developers are millionaires? charities?

if anyone takes the time and their resources to develop something test it release the source to the world even if it's under a NC license personally i'm thankful!

when someone releases something as opensource it's about sharing the results and source of the development with others, if they choose to produce it and sell it's purely up to them to decide what the charge.

if you need mental stimulation so badly might i suggest you find a quiet corner of the factory and massage your ego, it would be a better use of your time than trolling the forum , as for crazy... anyone this irrational should see a doctor something is very wrong

This has nothing to do with my product. I know the real cost of putting a hole through a piece of metal. You pull the lever, you push a button, you crank a wheel. Disrespect this technology.

Break it down to it's most basic form. When you do you'll see it's not that complicated and something not that complicated shouldn't be that expensive. We all stand on the shoulders of giants; people who release there designs do so for the greater good. When people take that contribution and use it to con people, it disturbs me. I am angry. You should be too. This inflationary pricing is bad for the RepRap project, because it keeps it out of the hands of those that need it the most, to save money.

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ohioplastics
This has nothing to do with my product. I know the real cost of putting a hole through a piece of metal. You pull the lever, you push a button, you crank a wheel. Disrespect this technology.

Break it down to it's most basic form. When you do you'll see it's not that complicated and something not that complicated shouldn't be that expensive. We all stand on the shoulders of giants; people who release there designs do so for the greater good. When people take that contribution and use it to con people, it disturbs me. I am angry. You should be too. This inflationary pricing is bad for the RepRap project, because it keeps it out of the hands of those that need it the most, to save money.

it has everything to do with your product , you are selling $0.52 cents worth of brass at $2.99, why don't you set a fine example of what you preach, by your standards that obscene