Bearing prices, for shame

[John Ferrell]

RE:
"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. "

I am not sure of the reliability of my source, BUT it is my understanding that the big cost in APC Props is in the cost of the manufacturing equipment. I was told that cnc equipment produces the dies and the injection molding equipment is the same on all setups. 

When a business takes the risk on a capital investment there is a break even point, then there is a period where the only costs are supplies and labor. It is not unusual to see a markup of five or ten times the current cost of goods sold. 

It is generally accepted that the risk justifies the reward.  

The question arises :  "When is the reward excessive?"

John Ferrell
6241 Phillippi Rd
Julian NC 27283
Phone: (336)685-9606
johnferrell at earthlink.net
Dixie Competition Products
NSRCA 479 AMA 4190  W8CCW
"My Competition is Not My Enemy"
 

  ----- Original Message ----- 
  From: Anthony Abdullah 
  To: discussion at nsrca.org 
  Sent: Wednesday, October 15, 2003 3:40 PM
  Subject: Re: Bearing prices, for shame


  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:
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