The cost of pedals

Danny1969

I've learnt a lot this year about the true cost of designing, making and selling a product. By Xmas I should have shipped over 1000 Dr Watson products since last November .... mainly Lion Tamers, ABX pedals,  IEM cables, Headphone pedals and all kinds of other stuff not readily available. Like most people I guess, I always do a BOM (bill of materials) and weigh that up against the market value of a product before I even make a prototype. Basically as someone said earlier in general you need to sell it for 3 times the cost of the parts  ....because even when you buy the raw materials in the hundreds as I do the price saving isn't that dramatic, not till you get to the tens of thousands does it dramatically reduce. 

Then you gotta put money aside to cover shipping losses, warranty repairs ... money to cover the time spend developing new products .... professional tools .... custom made templates etc.

But your right some drives and simple pedals do contain only a few quids worth of opamps and passive comments. I made this video as a challenge to go one better and use scrap parts to make a Tubescreamer




But I couldn't run a company and pay the bills if I made such as pedal and didn't charge £39 for it 
 

RaymondLin

meltedbuzzbox said:

I want the op to become the finance minister. 
We will be rich

The country will be bankrupt.

skunkwerx

guitarfishbay said:

Yeah I mean last time I saw a dentist they spent maybe a few pence on some mouth wash and probably not too much more on some impractically small mirror thing.  He said my teeth were fine and I didn't even get to ask him if he played PRS, still charged me though!  Where was the value for money in that transaction.

I get what you mean, but in those instances you're paying for their expertise, facilities and the time taken up in the chair.  

In your example I guess the value for money is peace of mind there. 

carlos

Nobody tell OP that the component cost of a cup of coffee is about £0.05 in coffee grains or he might lose his mind.

Danny1969

What about plectrums .. a pennies worth of plastic ? 

Sporky

carlos said:

Nobody tell OP that the component cost of a cup of coffee is about £0.05 in coffee grains or he might lose his mind.

Which reminded me of a minor existential crisis I had some years ago:

http://thefretboard.co.uk/discussion/80410/houses-are-mostly-made-of-dirt-and-twigs

carlos

Sporky said:

carlos said:

Nobody tell OP that the component cost of a cup of coffee is about £0.05 in coffee grains or he might lose his mind.

Which reminded me of a minor existential crisis I had some years ago:

http://thefretboard.co.uk/discussion/80410/houses-are-mostly-made-of-dirt-and-twigs

What a beautiful thread.
I recall back when I lived in Portugal I knew this café owner and for him selling pastries and sandwiches was just a way to get people in to buy cups of coffee. Even back then with an espresso at about €0.5 his margin was something like 10 to 20 times the costs, whereas for everything else it was 1.5 times or 2 times.

deano

It would be helpful if you could clarify what you mean by "pedal", "few", and "worth" in this context, as they don't seem to correlate with normal use of those terms.

Okay. The kind of pedal I was thinking of was a retail one (so not specially built for someone), commonly available in say Andertons or GAK, and one that does a common effect for a guitarist, do overdrive, boost, delay, tremolo, reverb etc. Not one that a retailer such as Andertons or GAK for example would have to think about before putting it on the shelves. So no "miscellaneous". Given I admittedly don't buy a lot of pedals my definition would be that of someone who doesn't necessary have a great deal of in depth knowledge. Take a random sample of any guitar shop on a Saturday afternoon and ask them to give you a list of pedal types. Those are the ones I mean. Those, to me, are pedals.

"few" is easy. The manufacturers cost plus their profit excluding those added by marketing for each electronic component. I am not discussing the enclosure nor the knobs. I didn't mean them, I meant the signal processing electronic components.

"worth" Okay. This is a tough one to define, but it is the value of the component to the user. So it is what I see as the components value. What you see as the components value as a builder might be - in fact will be - different. I see it as something that does something for me. It contributes to changing the sound of my guitar. Nothing more nothing less. To a builder its value might be as a component that returns a profit when sold on as part of the pedal. Yours is much more tangible than mine, and yet mine is much more tangible in its turn to another guitarist who may see the value of the component as something that yes changes the sound of my guitar, but also - if I believe the marketing and I have been segmented and paid out a lot of money for the component via the pedal, as something that increases my worth as a musician. That aspect is intangible and only truly measurable by the individual.

The reason I am separating out the manufacturing costs and tangible overheads from the intangible is because it is easy to see the effects of each.

The component rolls off the production line at the factory near Pune (for example) in India. It has a cost to rolling off the line as a component. But until it gets soldered onto a circuit board by the independent builder, nothing tangible has been done TO it. Things have been done WITH it. It has been...

Transported
Stored
Handled
Repackaged into smaller and smaller batches
Sold to a customer
Perhaps packaged and delivered

And a whole raft of things. These are overheads. But it it still exactly the same component that rolled off the production line in Pune. At no stage has anyone added anything to it, soldered something to it, or made any material change to it.

The overheads add cost to the component of course. But then it is placed into a pedal. And MXR - if it is their pedal - use the whole raft of advertising expertise they have available to them to sell the price at the cost plus the overheads plus whatever profit they determine they can extract from it. As does the independent builder. I guess different cultures allow more leeway when adding intangible values to something like a tone-altering pedal. In the US they have more tolerance for an independent builder talking up his pedal on social media than we do in the UK, but it does get done. How much does "transparent" add to a pedals selling price these days? It used to be quite a bit. Getting "that tone of plugging in to a screaming, searing tube amp" probably still adds to the cost. None of them are tangible, measurable things of course. They are all subjective and yet that advertising copy or well-written social media article can add real money onto the price, or help to shift a few more units.

Now, I mentally discount the advertising copy these days, and I like to do it all along the chain. Do I do it for food, clothes or petrol? Not often because I need those, but sometimes yes, mainly for clothes. Do I do it for cars, guitars, and pedals? Yep. Doing so helps me to figure out whether or not I really want to pay for something. If, at the end of thinking about it, I decide that yes, even allowing for that inflation, I still want this thing, then I buy it. If not, I don't. Frankly most of the time it is an "I don't" decision. Most things aren't worth it. Some things are.

So do I feel deprived because I don't have any boutique pedals in my possession? No. Because I do. I have a Joyo Sweet Baby. I have a kit-built Deep Blue delay pedal. I have a Joyo Tubescreamer clone. The originals failed my test, the clones do not. Unfair? Possibly, but certainly not for me.

Teetonetal

So do I feel deprived because I don't have any boutique pedals in my possession? No. Because I do. I have a Joyo Sweet Baby. I have a kit-built Deep Blue delay pedal. I have a Joyo Tubescreamer clone. The originals failed my test, the clones do not. Unfair? Possibly, but certainly not for me.

Of course, it’s much easier to be cheap when you don’t need to design a circuit, just clone somebody else’, build in a low wage country and mass produce with cheap components and enclosures etc.

what you are doing there is contributing to a race to mass produced mediocrity by withdrawing funding from the companies who do genuine development.

if circuits designs were protected by law, I think we’d have less pedal companies, but far more interesting ones...

munckee

I'm not saying this from a moral highground, I have 3 joyo pedals which are all great and exceptional value, but they only exist because of the r&d and years of sales of ibanez et al.

Your point that you do not see the value to you in pedals that cost joyo plus x because you can pay joyo price is valid but joyo needs the higher end pedal makers for their model to work if people stopped buying high end pedals no new pedals would come to the market.

Sporky

deano said:

It would be helpful if you could clarify what you mean by "pedal", "few", and "worth" in this context, as they don't seem to correlate with normal use of those terms.

"few" is easy. The manufacturers cost plus their profit excluding those added by marketing for each electronic component. I am not discussing the enclosure nor the knobs. I didn't mean them, I meant the signal processing electronic components.

So you're giving "few" a non-quantity definition that renders your entire argument both circular and nonsensical?

Only when you opened the discussion with "There is no pedal in existence that contains more that a few quids worth of components", I think we all assumed you were using reasonably commonplace definitions of each of those terms, consistent with the context of the sentence as a whole.

As you've made it clear that you were not conforming to normal defintions of the terms you used, I will simply reply with "Because owls compound utility fire engine metaparadox". I can assure you that it is a 100% cast-iron rebuttal of your entire argument, predicated on unusual definitions of each word and a new syntax and grammar beyond the comprehension of mortal intellects.

ICBM

deano said:

No. My argument is price up how much it would cost Texas Instruments to make a Digitech Whammy.

No, your argument is that if they did, the components would only cost a few quid, which is still bollocks.

Digitech *are* a large enough company to get the upper end of economies of scale. Being the size of Texas Instruments wouldn't gain them all that much more.

Philtre

What is the point of the OP? There's no doubt that the cost of components is way cheaper than the finished pedal product. Same as with the ingredients for a wedding cake. So what happens now? Manufacturers cut their prices? Everyone builds their own clones? We never buy another pedal again? Or what? Or is this just a philosophical forum discussion?

FatPete

Sporky said:

As you've made it clear that you were not conforming to normal defintions of the terms you used, I will simply reply with "Because owls compound utility fire engine metaparadox". I can assure you that it is a 100% cast-iron rebuttal of your entire argument, predicated on unusual definitions of each word and a new syntax and grammar beyond the comprehension of mortal intellects.

The aforementioned aliens advise me that it's squirrels, in this case, not owls.

UnclePsychosis

Joking aside the OP's entire premise is bonkers.

You could give me the entire componentry to build a pedal for free, but I wouldn't be able to do anything with it. As with most areas of technology the hardest part of building pedals is knowing how to connect the parts. 

Sporky

FatPete said:

Sporky said:

As you've made it clear that you were not conforming to normal defintions of the terms you used, I will simply reply with "Because owls compound utility fire engine metaparadox". I can assure you that it is a 100% cast-iron rebuttal of your entire argument, predicated on unusual definitions of each word and a new syntax and grammar beyond the comprehension of mortal intellects.

The aforementioned aliens advise me that it's squirrels, in this case, not owls.

How do you know I wasn't defining "owls" as "squirrels"?

FatPete

Sporky said:

FatPete said:

Sporky said:

As you've made it clear that you were not conforming to normal defintions of the terms you used, I will simply reply with "Because owls compound utility fire engine metaparadox". I can assure you that it is a 100% cast-iron rebuttal of your entire argument, predicated on unusual definitions of each word and a new syntax and grammar beyond the comprehension of mortal intellects.

The aforementioned aliens advise me that it's squirrels, in this case, not owls.

How do you know I wasn't defining "owls" as "squirrels"?

I don't know anything, it was, you know, the aliens.

Anyway, leave me alone, I'm just test-driving a pan-dimensional clean boost with fuzz, octave and genital nibbling, connected telepathically using the 4 neuron method. They price their stuff in energy and I'm struggling to work out if I can afford 6.23x10³ Exawatts, even with interest free credit.

deano

ThorpyFX said:

Obviously I build pedals.... if you can find me a way of making a pedal that uses only a few £'s worth of parts.... Ill be over the moon. Any product made in the UK or the WEST will cost more than an equivalent pedal made in the East.

Factored into the cost of my pedals are:

cost of parts:

enclosure (bespoke design, colour and silkscreen)
switch
PCB
Resistors
caps
Opamps
transistors
leds
led surround
jacks
dc jack
wire
solder
potentiometers
Knobs
Labour
boxes
stickers
manuals
guitar picks

amortised into margin:

rent
electric
water
test equipment
R&D
WASTAGE
Corporation TAX
VAT
Dealer Margin
litter collection
demo product
wages
telephone bill
fuel for transport
show costs
advertising
cardboard shipping boxes
tape
packing material
postage
sundry parts (pens, pencils, batteries)
software licenses (CAD, photo editing, video editing, accounting)
camera equipment
accountants fees
etc etc etc....


obviously it is VERY unlikely you can achieve the price point you mention.... and even if i were to only consider the cost of the parts (that would leave the business to fail) in generating my unit price cost.... it still wouldn't be anywhere near what you suggest... trust me.

I know you can't make a pedal using the pricing of the component's that I have outlined above. I know what you have as your overheads.

I was making the point that I personally use that strategy when I work out whether or not I want to buy something. As I say, there are no pedals I personally want that will cost me over £50. But then again, there are no pedals that I want at this moment in time. I have a few cheap ones. They passed my test. I don't feel the need for anymore.

I might pick up one of your pedals in a shop, or indeed any other high-end maker's pedals, and play it, make my calculation and decide that I do want it. It is doubtful because I have never played any high-end, boutique pedals (and yes I try them out now and again in Rich Tone, PMT, Dawsons or wherever) that had such an affect on the sound, that I thought "yes, this is worth the price on the label". You would have thought that at least one of them, probably more, would make me think "Oh I really want this regardless of the price". But none have.

All am saying is that I personally don't believe there are any pedals worth more than £50 and that the cost - the real cost, not that inflated by the production chain - of the components that actually do the work would cost more than a few pounds. Few is few. I'm not going to put a number on it, in spite of being asked to do so.

It isn't about the relative costing of saying "well how much did it cost for the man who made this to actually make it bearing in mind how much he has had to pay for the components and the box and the bits and bobs that work it and... ?" and so on.

To me it is about the absolute cost of saying "How much are the bits really worth that went into this that make it what it is?"

The second question gets to the essence of the thing. This pedal is designed to alter the sound of what goes in. It does it with components that really only probably cost this much when they were made. Everything else is overhead. Do I want to pay this much for that sound change made by those bits?

If the answer is no, it goes back on the shelf. If the answer is yes, it will still probably go back on the shelf because I'm tight like that. But sometimes I will bite the bullet and pay for the thing. It's just that none of the pedals I have done that with have cost more than £50.

Oh, in case people think I'm tight, well fair enough. I am not but if people think that then that is their opinion. I am looking at buying a Helix Floor in the January sales, so I am not averse to spending money by any means. Oh and don't think that fails my test because I said I don't see any single-effect pedals being worth more that £50. Digital multi-effects pedals are a completely difference kettle of fish and I will pay more for those quite happily. They do pass my test. In that case I have factored in what I getting out of the unit and have made a determination that it is worth it.

Snags

@deano out of interest have you ever run a business?[1]

The thing is, you can't just discount a bunch of factors from the equation because they don't suit your argument.  So when you say you only want to talk about the raw cost of the base electrical/electronic components, that's fine, but ... the cost of those only represents a small proportion of the cost (not price) of a pedal.  And the price of a pedal is always[2] going to be higher than the full cost[3].

You also can't lump everything other than the physical component cost into a big bucket labelled "marketing" and, further, behave as though "marketing" is a synonym for at best smoke and mirrors, and at worst snake oil.

At the end of the day any retail item is going to be priced based on a combination of:

- raw materials cost (functional components and packaging etc.)
- labour cost on a unit basis
- R&D costs spread across many units
- production costs spread across many units
- profit margin so everyone involved can live
- what the market will bear

Yes, the last item will to some extent influence the penultimate one.

Yes, using a slightly funkier (and more expensive) housing, or posher knobs etc. may enable you to position yourself in a slightly 'richer' market segment, although only if the actual function of the unit also performs at that level

There will also, for the canny, be a balance between how many units you can shift at what price (e.g. the classic "Do you want to sell 10 units at £100, or 20 units at £80?" question - the answer to which will depend on how much profit there is in each unit at the respective price points).

But ultimately, I suspect that by the time all the costs have been factored in, even people knocking out pedals in the £200 - £400 a unit range are unlikely to get massively rich on the back of it.  And they definitely won't from me.

[1] I'm guessing not, although thinking about some of the people I've worked with, I could be wrong
[2] unless it's a loss leader for some reason
[3] allowing for the "full cost" to include spreading fixed costs and sunk costs over a proportion of the notional profit across multiple units/volume of sales

Snags

Mine x-posted with deano's latest.

Which renders mine pointless, as I think the OP is basically saying "Expensive pedals aren't worth it to me, personally, so I don't buy them".

When seems perfectly reasonable, but also largely axiomatic.