Dangerous Prototypes Open Source Hardware

American distributer of Open Logic sniffer is needed...

June 30, 2010, 01:22:05 am

I'm having difficulty getting an order I made from seeedstudio.

I know that adafruit also sells the bus pirate, but they don't sell the logic sniffer.

Is there any US distributer of this device? If not, it would be a good idea to have one. Maybe adafruit ....

Re: American distributer of Open Logic sniffer is needed...

Reply #1 – June 30, 2010, 09:11:21 am

We'd like to have distributors, but the OLS is such a low-margin item we can't even give it away to distributors, they don't see enough profit in it. SparkFun will have 200 OLS on sale, but we literally gave them away for the publicity. There's a little more about my distributor experience here, though I still have not finished the article:
http://dangerousprototypes.com/forum/in ... opic=591.0

Re: American distributer of Open Logic sniffer is needed...

Reply #2 – July 01, 2010, 08:54:35 pm

Why can't the distributors just charge more than Seeed?  They provide a "value add" in the form of, at the very least:
Domestic support
Rapid domestic shipping

Those two would be worth, to me, on the order of $10-15 for the OLS.

e.g. I would probably happily pay Sparkfun or Adafruit $60 for an OLS rather than <$45 to Seeed (assuming you were compensated in the same manner Ian.)

It's the same reason Saelig could sell Rigol DS1052Es for $500+ when the eBay sellers were well under $400.  (The price delta on that particular item has gone down, and I think the eBay price has gone up.)

Semi-related:  For those of us who are willing to pay for an XC3S500E instead of a 250E (more blockram for sample depth), is there a possibility of that option and matching bitstreams?

Re: American distributer of Open Logic sniffer is needed...

Reply #3 – July 02, 2010, 01:53:46 am

I'm no expert on marketing, but retailers hate to start out with a price that is higher than existing retailers.  That's why you see musical artists who are contractually obligated to sell their own CD for the same price as retailers, or online retailers who list prices that are "too low to advertise."  Retailers like to know, from the get-go, that they won't be undercut by some easy-to-find competitor.

What this generally means is that the low-overhead retailers cannot advertise their price, effectively raising the apparent price of the item.  Ian has already said that he doesn't want to raise the price, and I assume that's still true even if there are 'secret' ways to buy at the lower price.  Some internet retailers get around this by forcing potential customers to place an item in a shopping cart before the price is revealed, or sometimes you even have to call someone to get the price.  In order for this industry practice to work for Dangerous Prototypes, Seeed would have to change the way their web site works.

You raise a good point that you're willing to spend more, but perhaps you're in a minority, or perhaps the industry has not modernized its expectations enough to allow for the close-to-margin prices made possible by the internet.

On the other hand, I suppose Adafruit doesn't have any reason to follow the standard operating procedures of the typical retailer.  Yet we already have Sparkfun carrying a few OLS, so if they aren't selling them for more then some piece of the equation must be missing.

Re: American distributer of Open Logic sniffer is needed...

Reply #4 – July 02, 2010, 07:24:38 am

I think SF's plan is to sell them for $50, no including shipping, so that is a bit more.

The OLS has a special 'gottcha', which is that the USB PID is only licensed for 10K units, after that we have to shell out $2000 for a USB VID of our own. So while some retailers have shown a willingness to take the OLS at cost, it isn't effective for us because it takes away from the units we can produce but it doesn't contribute to buying the PID.

A future version will have more ram, etc, but there's no plan to offer a larger chip for the v1. You could always hack a DIY upgrade if the chips are pin compatible.

Basically, I have not figured out the reseller formula yet. They are a strange beast that I don't understand.

Re: American distributer of Open Logic sniffer is needed...

Reply #5 – July 02, 2010, 09:10:00 am

Ian and I still need to work out details but I think at some point I will build and sell OLS boards through the Gadget Factory online store for North America. It will probably be at least a couple of months before we could work out the logistics of that though. With such low margins it is really hard to get to a point where I am not losing money in the form of the time it takes to build the boards though. ( If that makes sense )

Re: American distributer of Open Logic sniffer is needed...

Reply #6 – July 02, 2010, 09:30:10 am

[quote author="jack.gassett"]With such low margins it is really hard to get to a point where I am not losing money in the form of the time it takes to build the boards though. ( If that makes sense )[/quote]Have you solicited quotes from domestic assembly shops?  There are two here in the Seattle area that I have worked with, and the one down the street from me has amazing prices considering the cost of living here.  I'm sure it would add to the cost, but it beats burning your own time!

Re: American distributer of Open Logic sniffer is needed...

Reply #7 – July 02, 2010, 12:49:30 pm

[quote author="ian"]
Basically, I have not figured out the reseller formula yet. They are a strange beast that I don't understand.
[/quote]

cost + shipping to reseller + your margin + reseller margin = retail price

A reseller usually takes about 20-30%.

Re: American distributer of Open Logic sniffer is needed...

Reply #8 – July 02, 2010, 02:09:17 pm

You're right, and that's what I have found. I was being daft, it's not a mystery. What I mean is that I haven't figured out how to make this business model work with distributors. When a distributor takes 20-30%, and the markup is only 5-20% to begin with, I'm not sure how to make it work at the volumes I deal in. If we were making 10,000's of stuff the scale alone would take care of the problem, but instead it's 10s to 100s, and a retailer taking an extra 100 or 2 doesn't really knock it into the next bulk discount level.

Re: American distributer of Open Logic sniffer is needed...

Reply #9 – July 02, 2010, 02:13:36 pm

[quote author="Sjaak"]
[quote author="ian"]
Basically, I have not figured out the reseller formula yet. They are a strange beast that I don't understand.
[/quote]

cost + shipping to reseller + your margin + reseller margin = retail price

A reseller usually takes about 20-30%.
[/quote]Where did you get that?  Your 'cost' term is a bit too broad, yet you're way too specific by including shipping, which is probably usually paid for by the reseller.  There are a great many more things to add in besides just the shipping.  Anyway...

In many industries, the formula goes like this:

wholesale price = manufacturing cost * 2
suggested retail = wholesale price * 2

That formula hopefully covers design costs, marketing costs, etc.  In other words, the manufacturer hopes that they can sell enough units to cover the up-front or sunk costs.  The suggested retail is high so that retailers can offer a "discount" and make the customer feel like they're getting a deal.  Thus, retailers could theoretically take 50% of the customer's money, but the 'shipping to reseller' and competitive discounts bring that down to 20-30%

Re: American distributer of Open Logic sniffer is needed...

Reply #10 – July 02, 2010, 02:20:56 pm

[quote author="ian"]What I mean is that I haven't figured out how to make this business model work with distributors.[/quote]My hunch is that retailers want to make a lot more money than Dangerous Prototypes is making.  Since the customer is making up the difference, the natural laws of supply and demand would say that increasing the price is going to take any already microscopic market and make it disappear.

I suppose you could use the "manufacturing cost * 4" method and somehow give rebates to the customers.  With discounting, the customer ends up paying something more like "manufacturing cost * 3" with the profits split between the manufacturer and retailer.  The problem I have with that is that the retailer doesn't have as many up-front costs as the manufacturer, unless they go crazy on advertising.  Then there's the nightmare of returns, which can bankrupt a small company with a couple of great designs and one mistake.

Re: American distributer of Open Logic sniffer is needed...

Reply #11 – July 02, 2010, 02:51:08 pm

With costs I mean all the costs to produce/develop it and package it, ready to ship (with a DP product this would be the pcb (including design), software development (firmware), parts, manufacturing, programming and testing, wrapped up in pastic).

I wanted to make a general formula, and I know not all the step that are involde. And not everything is (direct) costs (the hours Ian is spending writing firmware for example). I don't know what exactly costs are involved to make a certain product (in fact it is very hard to calculate the real cost of a product).

Shipping costs is something that is usually paid by the last one in the chain (reseller in this case).

With retail price (list-price is a better word?) I meant BTW the price from a webshop e.g. sparkfun. Discounts aren't possible with most webshops I know.

Re: American distributer of Open Logic sniffer is needed...

Reply #12 – July 02, 2010, 06:32:24 pm

[quote author="rsdio"]
I'm no expert on marketing, but retailers hate to start out with a price that is higher than existing retailers.  That's why you see musical artists who are contractually obligated to sell their own CD for the same price as retailers, or online retailers who list prices that are "too low to advertise."  Retailers like to know, from the get-go, that they won't be undercut by some easy-to-find competitor.

[/quote]
I think the DP products might be an exception, due to the general stigma of ordering from a foreign vendor.

If the "cheap vendor" were a US domestic company, no one would want to sell at a higher price.  However, any US retailer that focuses even remotely on customer service (and most of the people who would carry DP products such as Adafruit and SparkFun do) knows that they can compete with a foreign vendor on more than just price.

Re: American distributer of Open Logic sniffer is needed...

Reply #13 – July 03, 2010, 06:32:59 am

[quote author="Sjaak"]in fact it is very hard to calculate the real cost of a product[/quote]Exactly.

It's feasible to calculate the total cost for making an entire production run, but you cannot calculate unit cost until you know how many units will sell.  Unsold units just add to the cost of the units that are sold, and hopefully the margins do not end up going (negative).

Ian is already minimizing the uncertainty by typically starting with a production of only 100 units.  I suppose that pre-orders and such can also help gauge the number of units that will be sold, unless people back out when it comes to spending real money.  There are also second, third, and further production runs of a finite size.

Have you guys looked into Kickstarter?  They coordinate with Amazon for payments and use credit card holds to gauge support for each project.  If a project is fully funded by the deadline, then everyone's card is charged and the project can begin spending the money.  If critical mass is not achieved, then the project is basically still-born, and dies without anyone losing any money (except designers and early contributors who put in work before production).

Re: American distributer of Open Logic sniffer is needed...

Reply #14 – July 03, 2010, 08:11:54 am

I have never heard of kickstarter, I'll check it out.