Should ESK8 Vendors Make a PROFIT? or NOTHING?

General Discussion
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Making everyone happy is one thing, just be aware that low prices don’t guarantee happiness! Consumer satisfaction is a very complex science.

Yes, word will spread & you will get feedback. But you need to have your wits about you, you need to actively protect your ideas! You must ensure you have the capital to improve, re-iterate & re-invest in your next order!

Let me try to boil this down further and explain what can happen.

There are hidden issues here that most people won’t appreciate unless they are in the business of small-scale manufacturing of products with Chinese factories who tend to ignore intellectual property if they think they can make a quick buck.

Most of these factories don’t like doing small scale orders, for them, it’s costly and has minimal profits. The factories run very slim margins and only make decent profits when order volumes are larger. Of course, they are well aware small startup business need prototype samples & small orders initially before they will be able to scale up and place large orders. The factories accept the low margins initially because they get two things.

  1. Intellectual property
  2. A new client that could end up being a big business ordering thousands $$ worth of products if they are successful.

THIS IS WHERE YOU NEED TO BE CAREFUL

If you don’t sell through the products quickly & make profits allowing you to increase your orders quantities with the factory they might start looking at other ways to capitalise on your awesome new designs & they may start offering your products directly to your competitors. Which is what happened with Hummie & Jacob hubs.

Consumers might think this is great! Competition is always good right? We’ll yes… It generally means there will be price pressure, two identical products in the market… So, of course, the consumer buys the cheapest one…

However this is a downward spiral, the innovation stops!! because now the focus is on how can we compete on price. Don’t worry about improving the material quality or testing new ideas… now it’s purely about lowering cost.

We have seen this with the VESC. (Producing in china vs higher cost production in US) We have seen this with Hummie Hub Motors & Jacob hub motors, that are both now being sold direct by the china factories who they trusted with their designs.

Low Prices & Lower Profits tend to kill innovation & lower service standards.

Finding the right balance is extremely difficult.

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62

I think this is a completely different issue with the DIY market. I view my eboard as a motorized vehicle, not a toy. It’s by no means a toy. Going 30+ mph is not something you play with. I’m setting aside funds to finally buy leather everything and a full face helmet, cause this is a serious mode of long distance transportation. I’m not done my new build, but I’m already up to around $1500 is just parts. Quad VESC, quad hubs, this is about getting from point a to point b quickly, efficiently, cheaply (a full charge is less than 40 cents), and with fun. Something I’m working on is create a real vehicle. Up til now, many builds are really toys. The VESC helps a lot, features like traction control are important for safety if you talking about high speed riding.

Right now, eboards are not generally treated as my vision is. I don’t run for carving, I ride for speed, the rush, and the need to commute. Boards today are not built for this with any sort of safety standards. The wheels are not good unless the roads are perfect or near perfect. There’s not suspension, there’s no back up breaks, we rely on a little motor or motors stopping you from flying down a steep hill. The industry will change and I think there will more focus on building transportation vehicles rather then a toy in the near future.

This topics not really about the cost though in the sense of what it should cost to make an eboard. It’s about the markup of sellers of eboard parts. I think a good board should cost 2k+ IMO.

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Haha this made me chuckle, in this heated discussion

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i wonder how so many things will go. we will see. I’m feeling guarded knowing you have hub motors coming out for sale. I wonder when you say youre poor and also coming out with hub motors how poor I think poor is. Over here in san francisco it’s a homeless paradise with free food everywhere. I go sometimes because eating out is too rich. Nice bowl of bean and vegetable soup with awesome salad and great bread. I dont have kids and no expenses and another job as a sub teacher. 175$ a day and I feel so rich I only work super part time and lived off 14000 last year. I want to sell the cheapest most durable thing possible. I will not be undersold. this is the game I’m playing. I think this keeps me much safer as far as any one copying it. I have a great price at 75 each for the steel. I’m tempted to be just a middle man and sell these for very close to that with the fantasy that everyone in the world will buy them and I’ll get to see them fly by. I have my pa for loaning me money but after that Im tempted to try selling them for cost and just sell the rubber. see what happens. I make money now but it all got spent on my vacuum infusion set up for a board. If there’s a chat site and we know all the basic science stuff and have a board there’s nothing left to do but try to take over your empire:smiley:

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65

This debate is awesome. Too bad I came in too late. In the cold and heartless world of business, investments or anything passionate, supply and demand trumps all. That’s basically the only way to gauge whether a business is booming. So what if a business make 150% profit from a certain product? In the world of capitalism, the market will correct itself and competition will pop up forcing him to lower his price. Unless of course you have a monopoly, but in this case, Enertion does not have a monopoly in the world of DIY esk8 products.

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im just kidding though and I’m not after onloop and he doesnt have a monopoly.

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Unbelievable how the old postulate of the adam smith invisible hand is still a religious belief despite all the research since then …

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Chinese manufacturers don’t have an incentive to innovate?

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I say, anyone who is providing goods and/or services should be compensated.

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none of the motor factories were producing esk8 hub motors until the esk8 innovators sent their designs to them.

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i agree. Its expensive to get all three and for people like me who are in their business infancy and who want to do all three its tough to realize that. Its tough to sit there in front of excel and say to yourself “Well shit, i’m going to have to charge [$something i personally feel is ludicrous but makes more business sense] to build these crazy things moving forward or i’m never going to get off the ground and attract more money or customers.”

every extra buck over cost of parts for these builds i have now has gone into trying things out and developing processes, and i fully expect it to be that way for a few more years. My shop will grow, my offering will evolve, i’ll have better parts and better processes, but i’ll still be eating sandwiches and working my day job until it reaches that critical point where i’m able to actually start keeping money around. @onloop is so on point with this.

ITs hard. Especially with a small toddler and weird work schedules. And sometimes i want to give up. And sometimes i freak myself out going down rabbit holes of what-ifs. And long hours in the garage, late nights and missing my family suck too. But i know the ends will be so worth it. Or the whole thing will go up in flames, who knows.

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As ESK8 gets more attention (and I’m oblivious because my world is the tech startup/video sector) but who sits at the top of the mountain? The founders of Evolve and Boosted? Are these guys living like tech entrepreneurs? I can see how Boosted tracked upwards through Y Combinator but that was awhile ago and I imagine there’s a big gap on ROI between software and hardware. To vendors - is the end goal to have a venture capitalist pump in large cash flow to allocate resources to R&D?

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Very interesting discussion, especially seeing the Hummie/Onloop dichotomy – both are responding to the paradigms laid out in the original prompt. To me it’s like comparing two marketing strategies – Hummie’s strategy is strictly word of mouth through honesty and low margins, onloop’s is to take higher margin and reinvest in Enertion by taking DJI phantom shots of the Australian coastline (joke).

As evoheyax has pointed out, the baseline here is that no business can exist without making a profit so the more interesting discussion is really around what the consumer should receive as a discount for being a beta-tester in the DIY community. Ideally the sale price for a beta product should be something like: cost + profit margin - R&D or testing costs.

That being said, it’s not like pricing is happening in a vacuum. DIYrs are feeling extreme cost pressure from the maturation of the esk8 market in general which is creating enough demand for larger companies to bring out more competitive products at lower cost. And as onloop mentioned, many DIYrs can’t or have difficulty benefiting from economies of scale which means the bigger guys are already at an advantage on their component pricing. As a result, if DIYrs were to charge a fair beta product price they’re probably going to have to charge above market prices (something LHB has mentioned).

I’m really curious how things will pan out for the DIY community. There still are plenty of advantages, such as shorter R&D cycles, higher levels of customization, access to newer components, et cetera. Also, evolve and boostedboard and others make plenty of mistakes that can be capitalized on, for example, both teased new board releases at the beginning of summer and boosted froze sales for a while then too, and both companies were not shipping until the end of summer which left a huge vacuum for a couple of months at the beginning of the summer which I imagine is the biggest selling season.

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Not sure about vendors, but my end goal is to either dominate my small corner or get bought out and keep building under a parent company.

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I dig it man, your whole custom made philosophy is awesome. Thank you for keeping us inspired!

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Are you looking for investors?

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Always. I just don’t know how to compose an enticing plan or have any knowledge of how that actually works so i’ve delayed looking. I don’t have a clue about business to be honest.

What i need is a money partner who knows business but recognizes and understands how to deal with an artist and can create a roadmap that makes sense and would still work for me. I can be hard to work with, and i recognize that.

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and they always want the business to have a track record of profit & growth! crazy fuckers.

the only exception to this rule is if you have a huge database of subscribers & user information. Only with this can you afford to ignore profit revenues from selling merchandise.

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Unless its a bored billionaire who wants to see what i do with it and would stay the hell out of my way, i can’t see a scenario that would work. Between that and what i mentioned earlier, all of these things make the right investor for me almost mystical. They would have to really get me and what i’m trying to do and not be trying to get an immediate return at the cost of my mission.

I could probably deal with a business partner though as long as they did their stuff and used their money on their side of things and we invested equally in both time and money and were both equally on the hook for stuff and were both hell bent on growth and development.

I can already see the arguments now though. “Why are you always ordering the most expensive stuff possible? So and so makes a similar thing and its half the price.”, “Why are you doing so much of this yourself and not outsourcing literally everything?”, “Why don’t you have your own parts made already?”, “Seriously? crushing your own glass grip? why don’t you buy it?”, “Why do you spend hours hand staining and detailing with a tiny brush?”, “Why don’t you have your own branded wheels? Crap Co will slap your label on them for hardly any money.”, “You can’t offer a warranty like that and keep any cash. Why are you doing it?”, “Why don’t you buy cheaper parts in bulk and lower the total build costs over the long run?”

because fuck you, that’s why. Now get the fuck out of my shop. lol

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