mattmiller
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PiZero Distrobution Idea

Sat Aug 06, 2016 12:23 pm

I've had a eureka moment
Continue to sell single PiZero at $5 but allows multiple purchases at what it should actually retail at to give retailers/Foundation their normal profit margin.

Multiple orders to initially go on back order so that stock can be built up to service it.

I'm assuming it would retail at about $10 to $15.

If this real price is too high to attract demand then it could be abandoned after initial orders service

Yes?

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Re: PiZero Distrobution Idea

Sat Aug 06, 2016 12:33 pm

mattmiller wrote:I've had a eureka moment
Continue to sell single PiZero at $5 but allows multiple purchases at what it should actually retail at to give retailers/Foundation their normal profit margin.

Multiple orders to initially go on back order so that stock can be built up to service it.

I'm assuming it would retail at about $10 to $15.

If this real price is too high to attract demand then it could be abandoned after initial orders service

Yes?
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Re: PiZero Distrobution Idea

Sat Aug 06, 2016 1:49 pm

Image

Edit: No, this isn't a Photoshop, this is really what you get at MicroCenter
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Re: PiZero Distrobution Idea

Sat Aug 06, 2016 2:49 pm

mattmiller wrote:I've had a eureka moment
At least put on a towel.
I'm assuming it would retail at about $10 to $15.
In computers certainly, when someone states a price is the price, it is hard to change that price in an upwards direction. For the zero, that price is $5. That is the "retail" price.

I do think they could edge into allowing ordering more than one pi, say by having some allocated into 10 packs, while retaining what they think will be enough to mostly stay in stock for single unit sales. We've already seen the various resellers, oh, sorry, distributors, inventing all sorts of packaged deals, largely to allow sales for much greater than $5 per pi, but the idea of selling in sets is sound.

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Re: PiZero Distrobution Idea

Sat Aug 06, 2016 7:49 pm

In computers certainly, when someone states a price is the price, it is hard to change that price in an upwards direction.
In computers, certainly, you'll never be able to buy one for $5 (said previously to Nov 2015) :)

Lets assume (in the face of no factual information worth its salt) that Foundation wanted everyone to have option of buying a $5 computer to lower financial barrier to entry

So in UK, this has been achieved.

Foundation have stated they are going to make them forever, so now that everyone has had a chance at paying $5 for one - then the loss leading deal can be switched off and it can be sold at a proper price

WinWin for everyone - Foundation , retailers and us customers who'd like to buy class-sets at $10 :)

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Re: PiZero Distrobution Idea

Sat Aug 06, 2016 8:36 pm

Bonkers loss-leading deal of the day: https://www.youtube.com/watch?v=s2H2kZWNb1Y

Pi Zero: cheap enough to be given away on the cover of a magazine, or as good as given away in-store. But only on a one-per-customer basis - understandable really if your mission is to put them in the hands of as many people as possible, rather than line the pockets of a few businesses. If Zero's were available from RPT in bulk at a premium price (rather than re-sellers as mattmiller proposes), at least the profits would be in the right place.

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Re: PiZero Distrobution Idea

Sat Aug 06, 2016 9:39 pm

mattmiller wrote: Foundation have stated they are going to make them forever, so now that everyone has had a chance at paying $5 for one - then the loss leading deal can be switched off and it can be sold at a proper price
That anyone is actually taking a loss on a $5 Pi Zero is an assumption--and an unwarranted one, at that. The objection RS and Farnell had to carrying the Pi Zero is that the profit margin isn't *enough*, not that there isn't one.

Indeed, it's fairly likely that the profit margin, as a percentage of cost, at each stage, is low, but within normal range. The problem is that--say--10% of a $5 object is a lot less than 10% of $35 object and the pick-and-pack costs are pretty much the same for either.

What I think would be an elegant compromise, once supplies are adequate, would be to bring out a "6 pack". That would keep the "unit" (package) margin up to a reasonable figure, the total cost with the typical range ($30) for RPF products, and the unit price per Pi Zero at $5. Sure, there are people who would like to buy them in lots of 10, but the difference between 2 packs being 12 and single pack being 10 is minor and there are probably a lot more people who might spend $30 on 6 than might spend $50 on 10.

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Re: PiZero Distrobution Idea

Sat Aug 06, 2016 9:54 pm

Bonkers loss-leading deal of the day
Pricing error or microcenter getting out of the nonsense?

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Re: PiZero Distrobution Idea

Sun Aug 07, 2016 12:13 am

Microcenter coupon that the clerk just applied to whatever was on the screen at the register for a price adjustment. I've had motherboards that cost $0.01 and other things. It's just how wonky their POS (in both senses of the acronym) works. No loss leader...
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Re: PiZero Distrobution Idea

Wed Aug 10, 2016 8:10 am

Point of clarification. The Zero doesn't make a loss. It just doesn't make much profit. Certainly not enough for the big suppliers to sell it, and only just enough for people like Pimoroni, and they prefer bundle packs to offset the low margins.

I like the 'pack' idea, 5 in a pack or similar, and limit pack sales to one per person. Might happen, might not.
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Re: PiZero Distrobution Idea

Fri Aug 12, 2016 6:42 pm

They need to keep the one per customer block to avoid the chaos caused when the issue came out a nobs were buying the all up just to line thier bone idle pockets.
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Re: PiZero Distrobution Idea

Fri Aug 12, 2016 7:57 pm

The genius distribution idea was to put it on the front of a magazine with stock in every town....
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Re: PiZero Distrobution Idea

Fri Aug 12, 2016 9:05 pm

I like 10 pack better, one pack per person per day :)

0's are ideal for quite a few of my projects, A+'s too big, CM's too expensive & need a motherboard.
jamesh wrote:Point of clarification. The Zero doesn't make a loss. It just doesn't make much profit. Certainly not enough for the big suppliers to sell it, and only just enough for people like Pimoroni, and they prefer bundle packs to offset the low margins.

I like the 'pack' idea, 5 in a pack or similar, and limit pack sales to one per person. Might happen, might not.
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Re: PiZero Distrobution Idea

Fri Aug 12, 2016 9:16 pm

mikronauts wrote:I like 10 pack better, one pack per person per day :)

0's are ideal for quite a few of my projects, A+'s too big, CM's too expensive & need a motherboard.
jamesh wrote:Point of clarification. The Zero doesn't make a loss. It just doesn't make much profit. Certainly not enough for the big suppliers to sell it, and only just enough for people like Pimoroni, and they prefer bundle packs to offset the low margins.

I like the 'pack' idea, 5 in a pack or similar, and limit pack sales to one per person. Might happen, might not.
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Re: PiZero Distrobution Idea

Sat Aug 13, 2016 12:24 am

There is also the cost of shipping, this adds to the real cost.
Shipping costs 4 pounds to OZ, making a single Zero cost 8.
Shipping 2 x Zero and they are 6 each.
3 x Zeros = 5.333 each.

100%, 50%, 33% what is an acceptable shipping cost?
Ship too many and weight/costs go up.
If you buy a Zero as part of a package, 500-700%.
I would be happy between 25-50% for a few at a time.
10 packs 10-15%?
Bulk distribution 2-5%?

Zeros are not big bulky things and anyone using them does not need a nice box and a manual.
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Re: PiZero Distrobution Idea

Sat Aug 13, 2016 4:53 am

I'd love to buy them 50 at a time (to save on shipping)

Heck, I asked the RPF about buying 100... was told to talk to the usual suspects.
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Re: PiZero Distrobution Idea

Thu Aug 18, 2016 3:42 pm

Indeed, it's fairly likely that the profit margin, as a percentage of cost, at each stage, is low, but within normal range.
Did that come to you in a dream?

Even the most ardent Pi fanbois knows there is "very little" with the emphasis on "very" margin on this product at most if not all stages of its manufacturing/distribution.

The $5 is a a holy grail/set in stone pricing for RaspberryPi and that is the cause of most of the problems

If it was priced properly so that margins WERE within normal range then all the problems / annoyances would be just down to true unavailability due to parts unavailablity

At $10 it would still sell like hot cakes

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Re: PiZero Distrobution Idea

Thu Aug 18, 2016 4:37 pm

mattmiller wrote:
Indeed, it's fairly likely that the profit margin, as a percentage of cost, at each stage, is low, but within normal range.
Did that come to you in a dream?

Even the most ardent Pi fanbois knows there is "very little" with the emphasis on "very" margin on this product at most if not all stages of its manufacturing/distribution.

The $5 is a a holy grail/set in stone pricing for RaspberryPi and that is the cause of most of the problems

If it was priced properly so that margins WERE within normal range then all the problems / annoyances would be just down to true unavailability due to parts unavailablity

At $10 it would still sell like hot cakes
You are familiar with percentage differences vs. specific amount differences....aren't you?

Note that a margin of 10% for a $5 item is $0.50, whereas on a $35, it's $3.50. Same percentage margin. *Big* difference in amount.

At $10 they'd probably sell reasonably well, but the demand would be far, far lower than at $5. At $10, the A+ (and Pi3A, when it arrives) would be more attractive for some projects that now look good for a Pi Zero.

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Re: PiZero Distrobution Idea

Thu Aug 18, 2016 11:18 pm

:)
I think most of us would be amazed to find that anyone other than possibly Sony were making 10% on the PiZero

If I had to guess, I'd say that Sony would be making close to zero %, RaspberryPi were making actually zero and the 2 retailers closer to zero than Sony's %

However, I'd estimate the retailers have made boat loads of money out of the extra sales made by people coming to their webshops so they are laughing all the way to the bank - fantastic promo item for them

This is all speculation on our part of course but there is no doubt that the PiZero pricing and resale structure is unique

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Re: PiZero Distrobution Idea

Fri Aug 19, 2016 1:44 am

mattmiller wrote::)
I think most of us would be amazed to find that anyone other than possibly Sony were making 10% on the PiZero

If I had to guess, I'd say that Sony would be making close to zero %, RaspberryPi were making actually zero and the 2 retailers closer to zero than Sony's %
I would actually be surprised if Sony is making as little as 10%. I would guess that the RPT is making between 10% and 20%, and retailers a bit over 10%. Granted that's guesswork, but so are your numbers. I wouldn't be surprised if there is a $0.50 per board margin at each level.
However, I'd estimate the retailers have made boat loads of money out of the extra sales made by people coming to their webshops so they are laughing all the way to the bank - fantastic promo item for them
No argument there. One can price the bits that go into any given bundle to see that. Even with that, the Adafruit bundle of Camera (v2), camera cable, and Pi Zero for $40 isn't bad. The cost would be the same if you bought all of the individual parts from Adafruit (they mark the camera up to $35), so you're paying $5 for the conveience, really.
This is all speculation on our part of course but there is no doubt that the PiZero pricing and resale structure is unique
For complex electronic devices (finished devices, that is, not something like a chip package), maybe, but I really doubt it. Any bit of electronics kit that costs less than about $2 (and they exist) is going to be in the same position. Even if you assume the "traditional" retail mark up of 50%, that's only going to come to $0.67, not a substantial difference, and the out of the wholesale $1.33 you have to have at least a manufacturing margin and perhaps a wholesaler margin as well. As I said before, the Pi Zero has low margins, but there is a profit at each stage.

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Re: PiZero Distrobution Idea

Fri Aug 19, 2016 9:08 am

mattmiller wrote::)
I think most of us would be amazed to find that anyone other than possibly Sony were making 10% on the PiZero
look at uk retailers:
pi zero £4
Minimum p&p is £2.50.
It costs them under half that for royal mail large letter postage (0.96) + jiffy bag (0.20)

So at very least £1 profit there in a £6.50 total (15+%)

I've no problem with that though.
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Re: PiZero Distrobution Idea

Fri Aug 19, 2016 10:15 am

mikerr wrote:
mattmiller wrote::)
I think most of us would be amazed to find that anyone other than possibly Sony were making 10% on the PiZero
look at uk retailers:
pi zero £4
Minimum p&p is £2.50.
It costs them under half that for royal mail large letter postage (0.96) + jiffy bag (0.20)

So at very least £1 profit there in a £6.50 total (15+%)

I've no problem with that though.
Pi Zero is £4 including VAT, so HMRC have taken 66p of your payment. The rules look unclear, but I think they take their cut of the P&P charges too.

Packing/packaging are also verbs. How long for a person to pick up the delivery note, collect the item from the shelf, put it in said jiffy bag with relevant paperwork, seal bag, and drop in outgoing post pile? Include employers costs of paying said person and you'll be looking at at least £10/hour, so >16p/minute. I hope they move quickly (and Amazon get slammed for the demands on their pickers).

The margins are small, and that's before you factor in any returns and customer service side of things.
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Re: PiZero Distrobution Idea

Fri Aug 19, 2016 10:49 am

They do take VAT on P&P too.

People costs are overheads, not product profit costs.
And £10 /hr?
£7.20/hr
Even less if they are young.

Yes there are a few more costs accociated with employees (insurance/maybe pension etc, administrative...) but these are indirect overhead cost and not profit from a product.

There is also the profit from each part making up the zero.

Of course it much quicker to pack 100 Pi Zeros in one go, one after the other, than pack bits and bobs of orders which is time consuming.
It all depends on the setup. No doubt RS etc are more optimised than the smaller garage shops.

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Re: PiZero Distrobution Idea

Fri Aug 19, 2016 12:20 pm

bensimmo wrote:They do take VAT on P&P too.

People costs are overheads, not product profit costs.
And £10 /hr?
£7.20/hr
Even less if they are young.
I was factoring in Employer's NI (13.8%), now obligatory pension offering, and the other basic costs which do have to be paid to employ one person.
The rule of thumb I often hear for engineering is twice salary as a minimum.
bensimmo wrote:Yes there are a few more costs accociated with employees (insurance/maybe pension etc, administrative...) but these are indirect overhead cost and not profit from a product.
And what has to cover those overheads? Oh yes, sale of products. If the profit from the sale of products doesn't cover all the overheads, then you go out of business fairly swiftly.
Why shouldn't a P&P charge (and that is what I was discussing) cover those specific overheads of packaging (v) the items as well as the packaging (n) around the item? Seems logical to me.

(Now is this the 5 minute argument or the full half hour?)
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Re: PiZero Distrobution Idea

Fri Aug 19, 2016 4:14 pm

Not an argument at all.

All profits from a product need to cover all overheads. That is the profit margin that obviously pays for all overheads (in a simple business)

It depends what you are wanting to define as the product profit or company profit.

I have absolutely nothing against it going in to P&P. Even if that's car and parking, a bus or postage and the coffee you will need that's all a cost in getting it.
It's why 2 Pi's are cheaper than 1 Pi for the customer (and takes no more time to package in a standard jiffy.)

It's still cheaper to ship it from China than within the UK ;-)


P.S. Pension is not obligatory, it only kicks in at over £10k for over 22's
So for a picker/packers you can employ the younger or employ people on minimum wage for less than 26hrs/week iirc. Not hard to do, one less overhead.


BUT given this distribution idea seems to be for overseas, maybe they just need someone over there to stump up and be a distribution/resale centre or use Amazon's sales network.

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