Raspberry Pi Forums

by Andraes Olofsson - parallella Person

this is well worth a read for budding kickstarters and also why the foundation managed to survive by the model they ended up with [that is manufacturing model not hardware ]
http://www.eetimes.com/author.asp?secti ... id=1327192

RaTTuS wrote:this is well worth a read for budding kickstarters and also why the foundation managed to survive by the model they ended up with [that is manufacturing model not hardware ]

I must admit I do not understand what you mean by that.

As best I can tell the lesson to be learned there is; don't promise to deliver a product at a cost less than it takes to produce, don't simply hope that it can be produced for the price one would like to sell it at, but that applies to all business ventures not just Kickstarters.

As long as people have a viable business plan I do not see a problem with using Kickstarter and similar crowd-funded routes. As vetting business plans is not in their remit then it is not their failing when projects commence with flawed business plans.

It seems to me that Andraes Olofsson is blaming Kickstarter for his own failings.

I agree with Hippy. It was crazy to raise that money, which is to make a commitment, without having supplier deals in place that could deliver it.

I really have to agree with Hippy on this, Andreas Olofsson seems upset that he was committed to delivering a product at a price that didn't cover his costs to make.
Where does the fault lie?

• Kickstarter don't hide the fact that they will take a percentage of all money raised;
  some pledges failing to make payment is a hidden cost but doesn't account for the shortfall;
  bill of materials cost > selling price, yup that's a big problem.

So even before accounting for development costs this project is doomed to cost them money for each unit sold, that can work on a limited scale for some business models (loss leader) but if its the result of poor financial planning then the fault lies with the creator, not the distributer.

yeah - I did not express myself very well in the opening post [at all even ]

I remember the various models that people suggested that the foundation operate under to get the initial shipments working and building up the business
make 10k , sell 10k make 15k sell 15k - the scaling up would not work for the amount that would of been pre-ordered

I've seen other kickstarters where the inital product may work for a small run [100 or 1k] but when you get to 100k things just get them swamped ...

also pricing your time is very important and should not be overlooked

RaTTuS wrote:I remember the various models that people suggested that the foundation operate under to get the initial shipments working and building up the business
make 10k , sell 10k make 15k sell 15k - the scaling up would not work for the amount that would of been pre-ordered

I understand how you mean and the Foundation got it right, did not over-promise, did not over-extend themselves.

That is IMHO because they completely under-estimated the potential for what they had, given the price they could deliver at, and the amount of interest there would be. If there were any failing in the Foundation's original model it was that, leaving them rather floundering once the true scale of desirability was realised.

That they did it how they did and succeeded does not prove to me it was the best way nor that Kickstarting it or similar would have been wrong or worse or could not have worked equally well. True, they could have gone through Kickstarter and screwed up, but I believe they could have also gone through Kickstarter and succeeded.

There are indeed some people who think "wouldn't it be great to build an exact Pi clone for just $5; let's put it up for crowd-funding and see what support there is". So they do and it will inevitably get backed heavily even though utterly impossible to deliver on. And that's then a problem for the developer and the backers and can even create reputation and credibility issue for funding sites.

That is using crowd-funding in completely the wrong way, it is promising to deliver while really only wanting to determine level of interest, undertaking market preliminary research. That is not what those sites are for and it does no one any favours when people do that.

Good read, thanks

Interesting, and similar to my thoughts on the subject. I suspect a lot of KS's have failed abysmally to actually find out how much it will cost to make their HW before launching their campaigns. CHiP especially.

jamesh wrote:I suspect a lot of KS's have failed abysmally to actually find out how much it will cost to make their HW before launching their campaigns. CHiP especially.

I am not so sure that is the case for CHIP. It seems they may have a business plan to subsidise what they are offering which would make the Kickstarter legitimate even if the pricing is not sustainable beyond that. If they haven't got their costings and finance properly sorted then, yes, they do have problems.

It may be a bit cheeky to run a subsidised When It's Gone It's Gone campaign which leaves a false impression a product will always be available at the Kickstarter price when that Kickstarter ends but I am not sure it breaks any rules. If they can find people to subsidise the deal they are offering then they could in fact keep selling below cost price forever.

"There is no such thing as a free lunch."

This type of thinking is not limited to Kickstarter.

In my experience, most people do not realize what it takes to develop a product (software or hardware) - never mind bringing it to market.

Some quotes come to mind:

"But it should not cost that much to develop it!"

"You are kidding right?"

"Why can't you do it for $X/hr (where X is tiny fraction of real development rates)"

"Why can't you do it for a fixed price $X"

"Bob said he could do it for $Y"

"It must be easy, you just have to <insert non-technical impossible idea by non-tech oriented person>"

"If I can get a $3 Arduino knockoff from China, why can't you do <more complex board> for $5 in qty.100?"

"It's only software, should not take you more than a few hours"

"the idea is the hard part, the rest is just some coding"

"you can't possibly need that much for testing and documentation"

etc, I am sure many of you have your own quotes.

Nor do most realise just how much difference there needs to be between BoM and selling price to cover all the other costs and still leave a reasonable profit margin.

Roger that.

Earlier I only mentioned choice quotes, and also did not mention support costs, inventory costs, shipping, taxes, duties, delays, non-tech staffing, etc etc etc etc

drgeoff wrote:Nor do most realise just how much difference there needs to be between BoM and selling price to cover all the other costs and still leave a reasonable profit margin.

I am reminded of a very common sort of thread that used to be (and probably still is) in rec.arts.sf.written.

New poster: I have a GREAT idea for a novel. I'm willing to split the royalties 50:50 with someone willing to write it.
Old poster: Ideas are the cheap part. They're what you trip over on the sidewalk. If you have such a great idea, *you* write it.
New poster: But I don't know how to write a novel.
Old Poster: Learn.