Archived from groups: rec.games.video.classic (
More info?)
"Impmon" <impmon@digi.mon> wrote in message
news:q9j0j1lfudeerkc3eovj9o06qdjgjegp2j@4ax.com...
> Figure the math:
>
> Assume it'd cost about $0.50 per unit for those 3 ports plus solder.
> Then do a run of oh say about 10,000 units, the total cost added would
> be about $5,000
>
> By not including those 3 ports, they saved several thousands dollars.
> It may not seems much but when there's silm profit margin, those
> dollars do count.
The numbers are much bigger than what's suggested above-- and that $0.50
comes off the *net*. Let's just take a WAG at the breakdown:
$19.95 retail
-$3.45 ($16.50 distribution price,retailer makes ~17%)
-$1.99 (10% royalty to the licensor)
-$2.99 (15% marketing overhead, advertising, channel promotion, samples,
co-op dollars, etc.)
-$8.00 (COGS, estimate $4 silicon, $1 PCB/discretes, $1 plastic, $1
package, $1 labor)
-$1.50 (OPEX, developer royalties, NRE expenses, etc.)
-------
$2.02 "net profit" per unit to the company
Now then, if you add $0.50 in Cost Of Goods Sold for a couple
connectors+PCB+labor you drop your per-unit profit not just by $0.50, but by
*25%*!
The above model is super simplified because you really tend to have up front
licensing fees, expedited shipping expenses, price-protection for unsold
inventory, warranty returns, etc. But any way you slice it the company that
creates the product isn't looking at much more than a few dollars net income
per unit as 'profit'. So, these things (like most toys) sell in the 100's
of thousands of units to make it worthwhile.
Now if the C64DTV sold ~500K+ pcs I will personally guarantee that 99.95% of
the people that bought them could absolutely care less about a PS2 keyboard
connector. ;-) If EVERY even remotely active C64 scene person bought one
we'd be talking what-- maybe 10K people worldwide? So it would generate an
additional $20K profit for the company. Meanwhile, the other 490K units
cost $0.50 more to make-- making for a loss of $245K in net income. Getting
$20K in sales at a cost of $245K isn't too good...
-Clay