FF Commentary by Thom

Started Nov 4, 2013 | Discussions thread
moving_comfort Veteran Member • Posts: 8,231
Re: Correct but too much logic to overlook corporate greed

Twong wrote:

Coming from a big consumer products manufacturer background, I never exclude R&D as well as SAG from cost. The % R&D on total revenue is typically low at 2% to 10%; more likely 2% to 5%. IOW, SAG is a much bigger factor in the overall manufacturing cost.

John_A_G wrote:

moving_comfort wrote:

And you're right, it's highly doubtful the K-01 is selling at a unit loss now, and it's a myth that any volume camera sells at a loss.

it depends on what you mean by "a loss". If you're talking about per unit cost of goods vs. retail price that is one thing. But, that doesn't take into account the program costs (R&D, marketing, etc....). So I agree it's a myth that any company makes a mass market product whose retail price < Cost of Goods (COGS). But just because retail price > COGS doesn't mean the program is a profitable one because you have to pay back all those R&D costs.

And in a field like this, that program cost is amortized over several different very similar products that share a lot of the same components and R&D. The firmware and ASIC controls for example are all handled by roughly the same team of employees sharing a common knowledge base and a shared source code - a new camera model is more of an adaptive undertaking than a ground-up expense.

In the case of the K-01 they probably saw a slightly higher R&D cost than a DSLR because MILC was new to them, but it's offset by (probably) less expensive components.

If a new company dropped out of the blue and decided to build an SLR camera, that R&D cost would be very high and would need to be a larger % of the per-unit price to get reasonable ROI. But that's not the model Canon/Nikon/Pentax are working under. They already have their Hardware/Software/Manufacturing and procurement infrastructure built.


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