Bearing prices, for shame

Wed Oct 15 11:40:06 AKDT 2003

I agree with you 100%. In fact, prospecting for margin, and plugging profit leaks in our industrial chain is what I do professionally. As tight as things have gotten, we have some account reps that would love to get an order for two bearings at 35% margin, specially if it is a no labor order where someone called in with a part number. We've done a whole lot more for less. Like going out and measuring and identifying the failed part, picking it up from the SC, and returning it to the customer within hours, all for 13% GP. Yes that is a customer that buys a lot more than two a year, but there is very little labor involved with turning a part number into a part and accepting money. The staff is going to be at the service center anyway. In addition, every unit we sell strengthens our buying position with the manufacturer, and factors into our strategic marketing credits (rebate and incentive program).
I manage my severely limited resources the way pattern builders manage weight (except for Mike Darr (you know I live you bro <vbg>), I save a gram at a time and in the end it adds up to a new engine, a digital servo, or a new airplane. If I save five bucks a piece on bearings that I have to buy anyway and can possibly help others do the same, why not.

P.S. in the APC example: I would think that they have to reset the equipment that sets the pitch and diameter of the props. The time they spend doing that costs them money, and the time spent makeing specialty props where they could be making 10x6 props also costs them money so I can see charging a premium. But if NTN makes a million of the same bearing and an SC hands you two of them out of a big drum or a box without all the packaging then it makes sense to me that you should get to enjoy a lower price. 

Anthony Romano <anthonyr105 at hotmail.com> wrote:

Parts are always a huge mark up since the service dept is usually a seperate 
profit center. Why are printer cables, toner cartriges, razor blades and the 
small size hardware we use so expensive? Competition is tooth and nail on 
the whole items but the compenents and peripherals are a source for some 
profit. Kind of an insight into how tight margins really are.
Went through the phone book and called a few local bearing houses and only 
one would begrudgingly do retail. My savings was about $5 plus shipping for 
an "equivilant" bearing that proved to not be.
Add up the cost of most YS parts and a whole engine is about three times 
the cost of a new one. Part of it is the extra labor, packaging, support 
and inventory costs as previously noted but most of it is numbers. How many 
15.5*12W props does APC sell compare to the 16*8? You are talking about 
250,000 at your sc how many people want to take an order for 2 and how 
profitable is that?

Anthony Romano

>From: Anthony Abdullah 
>Reply-To: discussion at nsrca.org
>To: discussion at nsrca.org
>Subject: Bearing prices, for shame
>Date: Tue, 14 Oct 2003 13:55:52 -0700 (PDT)
>
>I work at a major industrial distributor and for some unknown reason had 
>not utilized them as a source of replacement bearings yet. A flyer at my 
>local field asked me to get replacement bearings for his OS91 VRDF and had 
>me look up the part number. I found out that for at least the OS ducted fan 
>engine they are standard NTN bearings. Tower charges 14.49 for the smaller 
>front bearing and 16.99 for the larger rear one. I looked them up in our 
>system and our cost on the front is $3.79 and the rear is $4.84! Now color 
>me silly, but I think a 251% mark up is a little excessive. If only I could 
>sell anything for that I would be flying a pattern plane made of gold.That 
>doesn't even include shipping because both would have to be shipped so 
>that's a push. Now I can see the price if the bearings are specially made 
>for our application and require seperate tooling or equipment, but we 
>bought and sold about 3.7 million of those last year for industrial 
>applications alone, and probably have about
> 250,000 on the shelves of our 650 SCs at any given time. It is obvious 
>that OS buys a standard bearing, renumbers it and sells it to us at a huge 
>profit for their troubles. Another example of the RC market being taken 
>advantage of.
>
>Moral of the story: if you can find another source of replacement bearings 
>do it. My company has service centers in 48 states and any of the friendly 
>associates could probably save you money on them. I would even be willing 
>to acquire them and ship em and I would only charge you 150% markup. 
>
>Disclaimer: I know that there are people out there who would say "what 
>about OSs cost overhead, and razor thin margins, and blah.... blah.... 
>blah..." but I really am not concerned about that. I know it costs them X 
>dollars to do business, but my only concern is spreading the word to my 
>fellow RC enthusiasts so that we can stretch our already thin hobby dollar 
>as far as possible.
>
>

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