WRK

My Feedback: (2)

Out of curiosity I am wondering what it costs DA to produce a DA100 that sells for $1150.00. I would like to know what you think the cost number might be for DA or other manufacturers cost versus the retail price, my guess is that their cost is about 20% of the retail price.... What do you think?

rcdude7

My Feedback: (264)

I think many of us would like to know the real cost to mfg items like LCD TV's, cell phones, cars, etc. These secrets will never be revealed by DA or anyone else. I don't know how many engines DA moves on a day to day basis, but one thing is sure, the higher volume always drives the cost per unit down, all else being equal.

karolh

What do you think was the cost of the R&D to get the engine to where it is at now?

Karol

soarrich

My Feedback: (98)

Well they sold about 10,000 of them so it's probably 10,000 x $595 plus maybe 5 test engines.

With the Chinese engines it's the cost of 1 engine, then maybe 10 replacement engines plus shipping to the US.[X(]

aussiesteve

You've never run a business have you?

Exactly what costs are you referring to?
Raw materials alone
Direct manufacturing costs plus Raw materials
Direct Overheads plus Direct manufacturing costs plus raw materials
Business overheads, plus direct overheads, plus direct manufacturing costs plus raw materials

Etc Etc

I have no idea about the DA business model or costs but I can assure you that even the raw materials costs alone are higher than 20% of the selling price.

Tired Old Man

My Feedback: (1)

How much do you need to charge in order to employ only one person at a reasonable wage level? How much will it cost you, additional to that persons wages, to feed the governments tax coffers? How much more will it cost to provide the health insurance that everybody demands? How much will it cost to provide excellent, and generally free, customer service?

Steve, as you can tell, I have owned and run business and I know that a simple 5 or 10% initial margin is running a big negative.

You folks having that $5.00 a pound steak might want to consider that the guy that bred, fed, and raised that cow likely only got about 60 cents a pound for it. It took him a year or better to grow it.

aussiesteve

That sure is right
To give an example of typical business costs

When I had the Plastics Manufacture and Engineering workshop. I was paying my Tradesmen around $18 per hour in their wages. My cost to employ them (Including their wages) was $36.50 per hour including compulsory insurances, superannuation (Pension fund), public holidays (10 per year at that time), Paid Annual leave (4 weeks per year with a 17.5% leave loading), Paid sick leave and other costs. That was only the employment costs to the business - they paid income tax out of their $18 per hour. The "industry average" chargeout rate for those guys was between $45 and $55 per hour at that time.

Out of that "huge" profit came my business overheads and the wages of the office staff etc (Oh yes - that included my income too).

Ok - that was in Australia and in the late '90's but I am sure the ratios are similar today and are somewhat similar to US businesses.

I was a lucky one - my business had a great reputation and I had a lot of staff working for me and busy each day (between 100 and 130 throughout the year prior to selling the business after I had built it from scratch). Others had almost identical pricing etc and didn't have the luxury I had of spreading the somewhat large overheads across a large workforce.

oldvet70

My Feedback: (10)

While I agree with most of what you say, I've owned several businesses myself, my wife's family has 3 generations in the cattle business. They currently get closer to 94 cents a pound and that after 9 to 10 months growth. Farmers and ranchers will always low ball what they make. After all it's not in their best interest to loose all the farm subsidies that exist. Additionally a 10% profit may be sufficient if a business is large enough.

lill will

whole lot of bull

Tired Old Man

My Feedback: (1)

The point was that many seem to think that the price they pay for something is excessive and that they believe costs could be cut by half or more and still permit the seller to survive. They don't have a clue.

thevirginian

If a business makes between 2-5% profit on a product it can call itself profitable and lucky. In other words if DA sells a DA-100 for ca. $900.00 wholesale it would cash in roughly $20-$45 profit. That's the reality in the business world.

tkg

My Feedback: (1)

If you want to how much it costs to make an engine look at the pricing on the Chinese engines. Of course the price reflects the quality and the lack of overhead.
Look even close at the ratio of the cost between a DA 50 and the DA 100. Then look at the ratio between a Chinese twins and single. They are really getting to the average modeler.

karolh

Having been in business myself I know this to be so very true.

Karol

mrbigg

My Feedback: (21)

Same here. Can you believe that I'm going back into business for myself? Partime that is.

karolh

Guess you had a pleasant experience the first time around. Best of luck in your new venture.

Karol

aussiesteve

Didn't someone mention earlier about R&D?

Nearly all (if not all) of the Chinese engines have large scale industrial usage components in them. There are cylinders, pistons, crankshafts and even crankcases sourced from things such as small garden equipment to scooters used in them (this is part of the reason than many Chinese engines look alike). Others simply get original parts and attempt to copy them (This is part of the reason that quality varies a lot).

There are some exceptionally god engines coming from China (I know, I sell the best of them). But in pretty much all cases, the initial R&D cost is spread amongst a much larger market than Aeromodellers (Especially the cost of the major components). Of course, labor rates are also cheaper (but that is offset a little by transport and import tax costs). Raw materials are generally on a world wide parity price structure. Companies such as DA have stuck by their guns and locally produced as much as possible and performed a lot of their own R&D on a small market.

I am not getting into the argument about which is the best engine - they all have good and bad points (Ok - some of the "imports" have only got bad points in their performance but at least they might be able to be polished up and made to look pretty).

Decide what you want from an engine - Price, Local content, After Sales support, Quality, , Power curve, Fitness for purpose etc etc - than pay as you feel suits you. Whatever the seller is selling for is determined by thiers and their suppliers business models.

Usually the after sales service on a company that has shut its doors is pretty abysmal.

mrbigg

My Feedback: (21)

Thank you. I appreciate it.

flaminheli

Where are DA engines manufactured? Is 100% of the engine built inhouse in Arizona, or are they like these highend plane sellers with the overpriced planes that come from China and then branded with thier name. If so then remember that the same 30 cent an hour kid builds them so there should not be a huge differance between lets say DL and DA. But, if they are 100% manufactured and assembled here in the USA from the cylinder head down the prop bolts then by all means they should be more expensive. After all that is the American way. "Gouge the you know what out of everyone as long as they will take it." Something just doesn't sound right, you can buy a remaned small block chevy for the same price as a little 2 cylinder overpowered weedeater engine.

Jr25

My Feedback: (7)

Why does almost every question posted here end up so far off base? The origional question was simply asking what everyone thinks DL/DA cost to produce an engine is.

I love this forum and have learned so much from it, but wish people would avoid dragging every topic out into far left field.....

Jr

flaminheli

thevirginian

Well, and let's not forget the fact that the quality of the different components an engine is made of plays a significant role. Like the brand of bearings. Is it a quality brand bearing or a no name Chinese brand? Is it a quality brand spark plug or a no name Chinese plug? What about metalurgic standards? We all know that when it comes to aluminum there are big differences between the Chinese standards and the western standards. I had an airplane with an aluminum wing tube that was so soft that even a greased landing would bent it. Last but not least let's talk about QA: ISO 9000 cost s alot of money. Money Chinese manufactures can't and don't want to spend. And even without ISO 9000 western companies are better in Quality Control. And you pay for it. But there are exceptions to the rule on both sides. It seems the DL is one of them. Not everything made in China is junk.

flaminheli

Get a quote on a shipment of engines and and you might get an idea of the markup on these engines.
Management Certification: ISO 9000/9001/9004/19011: 2000
[link]http://svgroup.en.alibaba.com/productgrouplist-50409291/R_C_Airplane_Hobby_Model_Engine.html[/link]

Tired Old Man

My Feedback: (1)

Mark up. Funny term

Out of that "mark up" I get to pay the shipping costs of the product. Then I need to pay for warehousing space. Then I need to buy a large inventory of parts to maintain them, above and beyond the engine cost. Then I hav to arrange and pat for someone to provide all that "free" customer service. I also have to guess how long it will be before that big chunk of my money that went to buy the engines will take to come back to me. No interest or other use of the money until I get it back. I have to pay for phone calls from all the people that don't have a clue asking stupid, uneducated questions about what's best or how to use one. I get to pay out of pocket for return shipping *and repair) of product that was damaged by customer error and repaired at my expense. I have to make enough on each sale to put money away to buy more. Somewhere in all that I get to leave enough to put food on my table. If I want to develop an engine not yet on the market the development costs come from the sales of other products.

If I hire employees it only gets worse.

If you think you pay too much for an engine, do your own importing. If you are willing to deal with a very high quality product, make it all here. Then come back and talk about mark up and excessive profit.

RTK

My Feedback: (1)

Until someone has actually owned their own business they do not realize all the associated costs that go into the final product. Many have been mentioned previous, but don't forget the 12 hour work days and the lack of quality time outside of work.
My business is located in the socialist republic or california (which is currently broke) and going to try and balance their foolish wasteful spending habits on the backs of business and tax payers.
Yee Haa, I'm looking forward to 2009 and my I OWE YOU checks the state will be sending me, wonder if my bank will loan me money based on them. Might be time to start holding my hand out for part of the bail out money

mmattockx

I for one hope that DA are making a decent profit. Even "excessive" profit. They are in business to make money, it is not a charity. The people who are complaining of gouging have never ran a business as their bread and butter and do not get the long hours, stress and effort that go into it. Making a solid living should be a reasonable outcome of that effort. If they are willing to take the plunge and carry the risk, then more power to them. If you don't like it, don't support them. But don't complain about "excessive" profit until you have been on the other side of the table and know what you speak of.

Mark