No profit in makeing kits?
10-29-2010, 02:39 PM
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No profit in makeing kits?
http://cgi.ebay.com/ws/eBayISAPI.dll...=STRK:MEWAX:IT
Looking at the way kits sell on ebay I get the feeling that the idea that there is no money to be made selling RC airplane kits is as mutch BS as AMF saying that there is no money to be made selling Harley Davidsons.
1982
AMF "Sigh, there is NO money to be made selling Harleys".
"OH yeah? I'll buy one"!
AMF "You'll have to wait a year they are backordered".
Looking at the way kits sell on ebay I get the feeling that the idea that there is no money to be made selling RC airplane kits is as mutch BS as AMF saying that there is no money to be made selling Harley Davidsons.
1982
AMF "Sigh, there is NO money to be made selling Harleys".
"OH yeah? I'll buy one"!
AMF "You'll have to wait a year they are backordered".
10-29-2010, 05:15 PM
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RE: No profit in makeing kits?
I tend to believe the manufacturers who say there's no money to be made in making kits. Sales of small quantities of items on eBay don't have anything to do with actual demand for the products.
One of my local hobby shops still has a pile of kits in the back. Most of them seem to have been there for quite a while. The price tags get put on when they hit the shelves, and nobody seems to put new ones on. In other words, there are some good prices to be had. TF 60-size warbirds for $140-$160, and such. Not great deals, but pricing that's several years out of date. They're not moving these kits.
I tend to buy up kits that I wanted years ago but never got when they were in production. I'll pay a premium for them, and they sit in my basement hoping to be built someday. That's the eBay-type of market.
When a manufacturer has to train workers, buy equipment, and everything else that goes into producing a kit, they can't do that with eBay-sized runs. What I'd like to see is a company like GP, who've had a lot of very nice kits over the years, put out small batches. Rotate the designs, use great wood, and sell the products direct. Maybe that can't work for them.
10-29-2010, 05:55 PM
#3
RE: No profit in makeing kits?
I got first had experience with this issue several years ago. Myself and Minnflyer embarked on campaign to get Great Planes to bring back the Ultra Sport. I had seen the same exact thing you are seeing here, kits were selling on E-bay for a ton of money. So I thought it would be easy for GP to make a ton of money if the brought the kits back out. After spending some time on the phone with Art Pesch of Great Planes I soon understood why it doesn't work that way. I'm going to pick some numbers that are easy to work with so please don't hold these are gospel of the real numbers of this situation.
Right now there is a very very short supply of kits. So one kit comes up on E-Bay and 50 guys will start bidding on it, and it winds up going for a ton of money. There's a huge demand for little supply (yes, I know that's basic economics). Now the manufacturer kicks in his production line and produces a typical run of kits, lets just say 300 kits. Now the kits are released on the market and those 50 guys (actually 49 minus the one that won the bid on E-bay) all buy their kits. So out of 300 kits the manufacturer has 250 sitting in the warehouse. As MikeL stated above, it cost money to do a production run of kits. For the example's sake let's just say that it takes 150 kit sales for the manufacturer to break even on the run, and then start making profits after that. So with only 50 kits being sold the company is losing money since the kits aren't selling. The 50 guys that bought their kits are happy of course. But the manufacturer is in danger of losing their shirt because they have money invested that is producing no returns. It's this kind of thing that puts manufacturers out of business.
As I said above, Minn and I conducted a campaign for Great Planes to bring back the Ultra Sport. As we went in to we had heard from somebody in the know that the magic number was 300 kits, meaning that Great Planes' target would be 300 kit sales before they would reconsider bringing the kits back. We started a thread in the Kit Builder's Forum asking builders to commit to how many they would buy if the kits were brought back out. We did hit that 300 number and yes, they did bring the kits back out. They brought back the 40 and 60 Ultra Sport, as well as the 40 and 60 Super Sportsters. Initially they did one run on each kit. They sales on the Ultra Sport 60 were so good that they actually did a second production run on them. The US 40 is off the market now and I figure the 60 will be gone too when they run out of this run. But, I expected this. Don Anderson himself told me that they were not back permanently. With kits like this they will produce them for awhile and when the sales drop they'll pull them back, and then later on down the road they will bring them back if there is enough interest.
Hope this helps
Ken
Right now there is a very very short supply of kits. So one kit comes up on E-Bay and 50 guys will start bidding on it, and it winds up going for a ton of money. There's a huge demand for little supply (yes, I know that's basic economics). Now the manufacturer kicks in his production line and produces a typical run of kits, lets just say 300 kits. Now the kits are released on the market and those 50 guys (actually 49 minus the one that won the bid on E-bay) all buy their kits. So out of 300 kits the manufacturer has 250 sitting in the warehouse. As MikeL stated above, it cost money to do a production run of kits. For the example's sake let's just say that it takes 150 kit sales for the manufacturer to break even on the run, and then start making profits after that. So with only 50 kits being sold the company is losing money since the kits aren't selling. The 50 guys that bought their kits are happy of course. But the manufacturer is in danger of losing their shirt because they have money invested that is producing no returns. It's this kind of thing that puts manufacturers out of business.
As I said above, Minn and I conducted a campaign for Great Planes to bring back the Ultra Sport. As we went in to we had heard from somebody in the know that the magic number was 300 kits, meaning that Great Planes' target would be 300 kit sales before they would reconsider bringing the kits back. We started a thread in the Kit Builder's Forum asking builders to commit to how many they would buy if the kits were brought back out. We did hit that 300 number and yes, they did bring the kits back out. They brought back the 40 and 60 Ultra Sport, as well as the 40 and 60 Super Sportsters. Initially they did one run on each kit. They sales on the Ultra Sport 60 were so good that they actually did a second production run on them. The US 40 is off the market now and I figure the 60 will be gone too when they run out of this run. But, I expected this. Don Anderson himself told me that they were not back permanently. With kits like this they will produce them for awhile and when the sales drop they'll pull them back, and then later on down the road they will bring them back if there is enough interest.
Hope this helps
Ken
10-29-2010, 06:30 PM
#4
RE: No profit in makeing kits?
Don't forget the kits that sit on the Hobby shop shelf forever and end up a loss to the Hobby shop. If they don't sell in a respectfull time they become a loss and a loss means he doesn't buy anymore, so the mfg doesn't sell any either so he doesn't make any more. It all makes $$$$ to me. Most people don't understand it. [
] [&o] ENJOY !!! RED
] [&o] ENJOY !!! RED
10-30-2010, 01:13 PM
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RE: No profit in makeing kits?
I tend to buy up kits that I wanted years ago but never got when they were in production. I'll pay a premium for them, and they sit in my basement hoping to be built someday. That's the eBay-type of market.
I have an Aerodrome Flybaby with mono and bipe wings that I'm torn between keeping NIB or building.
Thankfully there are kit cutters available for those who must have that ONE plane. They are pricey, though.
Those LHS's that still have kits should put them on ebay. Would probably make a good profit.
Ed
10-30-2010, 05:11 PM
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RE: No profit in makeing kits?
Based on the logic of this thread, models of Harley's on ebay must be through the roof.
I guess since it is profitable to sell kits and nobody is doing it, there must be some global ARF conspiracy?
I guess since it is profitable to sell kits and nobody is doing it, there must be some global ARF conspiracy?
10-30-2010, 06:20 PM
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RE: No profit in makeing kits?
ORIGINAL: BasinBum
Based on the logic of this thread, models of Harley's on ebay must be through the roof.
Based on the logic of this thread, models of Harley's on ebay must be through the roof.
http://cgi.ebay.com/GENUINE-NEW-EVEL...item564078fb05
10-30-2010, 06:21 PM
#8
RE: No profit in makeing kits?
Reality is as of now, only a few select kits bring big bucks at auction, many less in demand kits you can still get cheap from ebay and here, All depends on what you're looking for. After all, those kits that are still on LHS shelfs are there for a reason.
10-31-2010, 09:02 AM
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RE: No profit in makeing kits?
We were recently at a LHS in Plano (looking for a discontinued OS engine part) and the conversation turned to how hard it is to get some Sig stuff, disappearance of Goldberg, dwindling kit supply, etc.
The owner's wife commented that they had a Goldberg Ultimate Bipe on the shelf, marked down some amount, and it had been there for years. There's a long thread lamenting the death of this kit, and a shop in an area with more than a million people close by cannot get rid of the one they have.
They have a good handful of kits on the shelf and most have been there for a long time.
The owner's wife commented that they had a Goldberg Ultimate Bipe on the shelf, marked down some amount, and it had been there for years. There's a long thread lamenting the death of this kit, and a shop in an area with more than a million people close by cannot get rid of the one they have.
They have a good handful of kits on the shelf and most have been there for a long time.
11-01-2010, 07:52 PM
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RE: No profit in makeing kits?
If you want a kit badly, you'll call shops and ask if they have it. Toss enough money at them, and they'll even ship it where ever you like.
I don't know if kits will ever be a mainline business like they were just ten years ago. I do know that the majority of big-name kits have gone off the market. The rest are headed towards that, too. If you want a specific kit, buy it when you see it. You'll see it a lot less often as time goes on.
I've got more kits than I'll ever build, just because I'm a slow builder that doesn't like building. But when I have the time and the inclination, I'll have a kit in the shop that I've always wanted to fly. Not to build, but that's how the model is available.
ARFs just make too much economic sense for the vast majority of people. It's got nothing to do with anything sinister or any sort of societal collapse. Most folks get into the hobby to fly, and it's cheaper in both time and money to get an ARF in the air. I firmly believe there are many, many unfinished 40-size trainer kits out there. It used to be that a person almost had to get over the hurdle of building to fly. That's not true anymore.
Combine the decline of glow with larger gas models and smaller electrics with all of that, and it's easy to see why kits are going the way of 1/2A, control line, free flight, etc. Time moves on. If you want kits, buy them while you can. Same goes for a lot of less common glow engines.
11-02-2010, 10:59 AM
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RE: No profit in makeing kits?
ORIGINAL: Sounds like they need a web site, years ago
I've seen very few LHS web sites that have any "real" info about their inventory. The ones that do have a link for online shopping usually just open a version of the Horizon web site. Since many shops are running on a small budget, small staff, and possibly are not "computer" people, I understand why they do not have robust sites.
Shops could probably ebay the desireable kits easier and cheaper than keeping a web site updated but that also takes time.
11-02-2010, 02:47 PM
#13
RE: No profit in makeing kits?
Another reason kits are not being made has to do with PARTS....Company A makes a run of (say) 300 kits and sells 200 of them right away. 3 months later I call and ask for another cowl, canopy, and right wing panel. They sell those parts and now they have a kit with missing parts. It would be a perfect world if the next guy orders a left stab and left wing, but if he also wants a right wing, now two kits are 'parts'. Keep this up and pretty soon they have sold a total of 280 kits...do they make another run of kits? Sales are slowing down a bunch of kits are now 'partial' and they have to make a $$$ decision. Let the rest sell and that's it OR make another run of kits - but how many? 50? 100? 150? Tough decision (now if it was a WARBIRD it would always sell 
)
)
11-02-2010, 05:20 PM
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RE: No profit in makeing kits?
I hadn't thought of the parts issue. There's perhaps more to it than cannibalizing existing kits. I seem to recall a law requiring some manufacturers to provide parts and support for their products for something like five years. I've seen it it reference to computer companies, but I have no idea how or if it applies to goods like kits.
I'm sure there are plenty of costs that large manufacturers deal with that we don't readily see.
11-02-2010, 07:25 PM
#15
RE: No profit in makeing kits?
Actually it's pretty easy to figure out when it cost me anywhere from 25 to 50 percent more to build a kit than an ARF. Case in point Sig's 1/5 scale cub $229.95 verses a 91" CMP cub for $187.00. I just love building so to me it's worth it - however for the average guy it just does not make much sense.
John
John
11-02-2010, 08:36 PM
#16
RE: No profit in makeing kits?
ORIGINAL: MikeL
I hadn't thought of the parts issue. There's perhaps more to it than cannibalizing existing kits. I seem to recall a law requiring some manufacturers to provide parts and support for their products for something like five years. I've seen it it reference to computer companies, but I have no idea how or if it applies to goods like kits.
I hadn't thought of the parts issue. There's perhaps more to it than cannibalizing existing kits. I seem to recall a law requiring some manufacturers to provide parts and support for their products for something like five years. I've seen it it reference to computer companies, but I have no idea how or if it applies to goods like kits.
I'm sure there are plenty of costs that large manufacturers deal with that we don't readily see.
More likely they produce a percentage of extras that never make it into a box, I can't see a company robbing a $10 canopy from a $200 kit
Goldberg always had wing kits available as well as individual part sheets you could buy in addition to the more common replacement parts like Cowls, Canopies, etc.
John,
You just don't get the same "That-a-boy"s from assembling an ARF do ya?
11-07-2010, 03:28 PM
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RE: No profit in makeing kits?
heres what confuses me, with all the laser cutters and cnc stuff how hard would it be for maybe a group of 2 guys to keep 100 kits in production?
the hardest part would be making all the plastic canopy's and other plastic parts but the actual wood.....piece of cake....toss it in a laser cutter hit the button and walla....now i can understand it when its diecut cause changing all of the punches and whatnot would be a huge pain. but with laser engravers they could maybe make 10 models, and when those sold make another 10, so you arnt putting a big amount of cash into a production run that wont sell, but still has a small demand to make money. and when you do this with 100 different kits then your bound to make alot of money. i would buy a great planes profile 38 and another gp rapture, they will never have enough intrest to hit the 300 mark but i bet 20 guys would want em. Same with the gp patroit.
and honestly some of the plastic parts could be substituted for balsa blocks or foam blocks.
heres the issue, this opperation would have to take place in the usa to be effective (say in a shed next to the tower warehouse), cause no one is going to want to wait 3 weeks for the boat from china to ship over.
now us modelers would prob take a small hit, the box wouldnt be all pretty, it would brob be a generic box.
the capopy's may not be a perfect fit, they could prob fudge a few from production models to fit the others. or the canopy's could be foam blocks that would have to be covered
more wood = more sanding for replaceing some plastic parts
we wouldnt get the stickers that say the models name
ect
but in general, if gp wanted to this wouldnt be a hard opperation to keep going. it would take alittle while to setup but they could make a decent profit if they did it right.
the hardest part would be making all the plastic canopy's and other plastic parts but the actual wood.....piece of cake....toss it in a laser cutter hit the button and walla....now i can understand it when its diecut cause changing all of the punches and whatnot would be a huge pain. but with laser engravers they could maybe make 10 models, and when those sold make another 10, so you arnt putting a big amount of cash into a production run that wont sell, but still has a small demand to make money. and when you do this with 100 different kits then your bound to make alot of money. i would buy a great planes profile 38 and another gp rapture, they will never have enough intrest to hit the 300 mark but i bet 20 guys would want em. Same with the gp patroit.
and honestly some of the plastic parts could be substituted for balsa blocks or foam blocks.
heres the issue, this opperation would have to take place in the usa to be effective (say in a shed next to the tower warehouse), cause no one is going to want to wait 3 weeks for the boat from china to ship over.
now us modelers would prob take a small hit, the box wouldnt be all pretty, it would brob be a generic box.
the capopy's may not be a perfect fit, they could prob fudge a few from production models to fit the others. or the canopy's could be foam blocks that would have to be covered
more wood = more sanding for replaceing some plastic parts
we wouldnt get the stickers that say the models name
ect
but in general, if gp wanted to this wouldnt be a hard opperation to keep going. it would take alittle while to setup but they could make a decent profit if they did it right.
11-07-2010, 04:21 PM
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RE: No profit in makeing kits?
Say a two-man operation with modern equipment and skilled workers, necessary marketing, packaging, and overhead... $300,000 in sales might be required, just to use a round number. That's 2,000 kits at an average selling price of $150.
I don't think there's enough demand out there. If there were, they'd be doing it. Business is funny like that.
11-07-2010, 05:10 PM
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RE: No profit in makeing kits?
LOL Jimmy you just described 90% of the kit cutters out there.
Plastic parts are easier than wood. You just need a vacuum former and a plug.
Cowls and other items are easy, "Hey Fiber Glass Specialties, I need 20 GP Patriot cowls"
I wonder if there is a market for higher end kits. Kits that would have real name brand hardware and fiberglass cowls and so on.
The biggest cost is the lawyers. First GP will sue you for making the Patriot, even though they don't have any planes to make them". Then Northrop is going to sue GP because the Patriot looks like the F-20.
11-07-2010, 05:19 PM
#20
RE: No profit in makeing kits?
I know a company that tried to sell a Very nice plane in a plain carton with just a small picture on it. No one would even look at it, they ended up having to have new lables made and put on the cases. Another thing is that people now days don't go with something that means a little work ( thinking ) for them and parts that aren't perfect or have to have a little sanding don't cut it in todays market.
Sorry for the negative thoughts but I've been there and it's not as easy as you think. People, people people. ENJOY !!! RED
Sorry for the negative thoughts but I've been there and it's not as easy as you think. People, people people. ENJOY !!! RED
11-07-2010, 05:58 PM
#21
RE: No profit in makeing kits?
Probably the best bet for kit makers would be to do a secret run..then slowly sell the kits off now and then on ebay..to people who really want them, and will pay top dollar.'
Stinks for the buyer though.
Stinks for the buyer though.
11-08-2010, 09:16 AM
#24
RE: No profit in makeing kits?
I am sure that the problem lies with new modelers being assured that they will crash almost immediately by some old hands. Why would anyone spend several months building a kit that they have been told will be taking a dirt nap ASAP? So it would be much more logical to buy an ARF, crash, buy another ARF, crash and either buy another ARF or quit altogether.
I've sold many more kits than ARFs and the majority of customers who come in my shop are kit builders. Why? Because I teach my customers how to fly and transition to more advanced aircraft once they receive time on trainers, either their's or mine.
My guarantee is that if while I'm providing the training, if anything happens to their aircraft, I will either repair or replace their airplane. I seriously doubt that anyone else would go that route, but it proves to me that the main reason kits are disappearing is the fear of crashing their month's work on their pride and joy.
Fliers1
I've sold many more kits than ARFs and the majority of customers who come in my shop are kit builders. Why? Because I teach my customers how to fly and transition to more advanced aircraft once they receive time on trainers, either their's or mine.
My guarantee is that if while I'm providing the training, if anything happens to their aircraft, I will either repair or replace their airplane. I seriously doubt that anyone else would go that route, but it proves to me that the main reason kits are disappearing is the fear of crashing their month's work on their pride and joy.
Fliers1
11-12-2010, 09:02 PM
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RE: No profit in makeing kits?
ORIGINAL: jimmyjames213
heres what confuses me, with all the laser cutters and cnc stuff how hard would it be for maybe a group of 2 guys to keep 100 kits in production?
the hardest part would be making all the plastic canopy's and other plastic parts but the actual wood.....piece of cake....toss it in a laser cutter hit the button and walla....now i can understand it when its diecut cause changing all of the punches and whatnot would be a huge pain. but with laser engravers they could maybe make 10 models, and when those sold make another 10, so you arnt putting a big amount of cash into a production run that wont sell, but still has a small demand to make money. and when you do this with 100 different kits then your bound to make alot of money. i would buy a great planes profile 38 and another gp rapture, they will never have enough intrest to hit the 300 mark but i bet 20 guys would want em. Same with the gp patroit.
and honestly some of the plastic parts could be substituted for balsa blocks or foam blocks.
heres what confuses me, with all the laser cutters and cnc stuff how hard would it be for maybe a group of 2 guys to keep 100 kits in production?
the hardest part would be making all the plastic canopy's and other plastic parts but the actual wood.....piece of cake....toss it in a laser cutter hit the button and walla....now i can understand it when its diecut cause changing all of the punches and whatnot would be a huge pain. but with laser engravers they could maybe make 10 models, and when those sold make another 10, so you arnt putting a big amount of cash into a production run that wont sell, but still has a small demand to make money. and when you do this with 100 different kits then your bound to make alot of money. i would buy a great planes profile 38 and another gp rapture, they will never have enough intrest to hit the 300 mark but i bet 20 guys would want em. Same with the gp patroit.
and honestly some of the plastic parts could be substituted for balsa blocks or foam blocks.