EFI control

[James Montebello]

Production costs are only a small part of the problem.  Have you ever
worked out costs for support, personnel, marketing, distribution, etc.?  

Products, even really good products, don't sell themselves.  This is a
very common misconception, particularly among engineers. 

The higher the volume you're trying to push, the higher your marketing and
support expenses will be.  Then there are liability issues.  The broader
your customer base, the dumber it is, and the dumber your customer base,
the greater your liability exposure.  Lawyers can be really, really nasty.

The general rule of thumb is, to simply break even, you have to charge
3x the total unit cost, even at very large volumes (Sony/GM/IBM level
volumes).  The $390 unit cost you quote for your design means a retail
price of $1200 for *break-even*.  Add a razor-thin 10% profit margin,
and you're looking at $1300 a pop.  About what a full blown SDS or basic
Electromotive system will run.

Now you have to explain to the potential buyers why your unit is so
much better than all those others on the market, and do so in terms
they can understand.  To get 2000+ units per year, you have to sell to
a big market, including lots of ads in various magazines, stumping at
trade shows, schmoozing with the trade press, etc.   All this work for
a grand $250K per year profit, assuming you manage to sell 2000 units
per year.  I'm willing to bet SDS is NOT selling that many.  Note that
none of this has anything to do with designing or building the ECU or
associated wiring itself.  Note that none of this has ANYTHING to do
with the quality of the unit.  You sell based on perceived quality, not
actual quality, particularly as a new entrant into an already hot market.

If you want to built an OEM quality ECU that will mount up to MY car,
be absolutely trouble-free, and will sell for significantly less than any
of the other available units, then I'll be first in line to buy one from
you.  I'll make sure to be early so I grab one before you go bankrupt.
You'll be the last in a long line of like-minded engineers who simply
don't understand the business side of the operation, and think that
quality will sell itself.

james montebello

On Wed, 7 Feb 2001, Shirley, Mark R wrote:

> Just goes to show that not everybodies definition of enthusiast is the 
> same.  I don't like trailer queens.  I want my cars to be daily drivers
> as well as my hot rods.  I have an engine in my truck that is so unusual
> that it needed to have an aftermarket ECM to operate.  There simply was 
> no other option.  It's intended to be a daily driver, but I'm always
> fighting
> the aftermarket EFI since it's not weatherproof.
> 
> I know exactly what it costs to design and build a hardened ECM for lower
> volume applications.  It used factory sensors, was weatherproof, came with a
> 
> near-OEM quality harness, was programmable via laptop, etc.  In volumes
> of 2000-5000 pcs per year it ran around $250 to produce.  The harness cost
> $140 to produce.  That's a pretty tidy profit for the manufacturers if they
> price it at $1000.  Heck, they could probably get $1200-1300 for it.  It was
> that nice.  
> 
> All I am saying is that the aftermarket guys can do better, and there's a
> market
> for better quality merchandise without paying $4000 for a racing system like
> a Motronic.  There's at least two of us here on this dinky little mailing
> list.
> 
> If you give somebody decent quality merchandise for a decent price, it will
> sell
> itself and you'll put your competitors out of business.  The fact that there
> are
> so many little EFI systems out there shows that no-one has done this.

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