RCU Forums - How do they do it?

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How do they do it?

Hey everyone,

(1.) Just wondering where Tower Hobbies and other such places make their planes that they sell?

(2.) For example the ARF's they sell and the Kits they sell??

(3.) Like the PT-40 Trainer or tower hobbies 40 trainer...offered by tower goes for roughly $70.00.... how does Tower sell this kit for $70.00 and actually make a profit? I'm currently completing a scratch build project and have thought about making it into a kit....and my kit would sell for more than the 70 bucks.

(4.) Sooo how do they do it??? The cost of the wood, laser cutting, plans printed, etc... will run me close to $100.00.

(5.) What am i doing wrong?

*I dont in any way want to single tower hobbies out here, many places are able to do this, just they seem to be one of the bigger ones, how do they do it?*

Thanks for your time,

David

RE: How do they do it?

you are paying retail prices they get wholesale prices plus qty discounts

RE: How do they do it?

Yea like if they buy so many of a plane say 15-20 for example they probably get each plane for half the price that it would normaly cost..

RE: How do they do it?

so it seems like its inevitable that my kit will sell for more ??

RE: How do they do it?

It's called China.

Most ARF's are made in China, (or some other pacific -rim country), and they are getting pretty darn good at it too. Don't be too impressed. They are making plenty of profit on a $70 trainer. They are made in batches of thousands at a time, warehoused and distributed through companies like Tower, Horizon, etc...

The actual cost to produce that ARF was likely less than $20 shipped.

RE: How do they do it?

When you pay a person $0.05 per hour, things cost almost nothing.

So every time you buy an ARF for next to nothing, you are supporting a sweat-shop.

Before everybody jumps on my for saying this, I just bought my first ARF (actually my wife bought it for me). I would have gotten a kit, but this plane is not offered in kit form.

RE: How do they do it?

I once read that a $100 rc engine only cost the manufacture $6 to actually make it.

I also know a distributor for Reebok tennis shoes that gets them for around $6 a pair from the manufacturer.

If you don't support the sweat shops, the sweat shop employees wouldn't have a job Period!

RE: How do they do it?

they buy thousands at a time and pay about 10 per kit direct from china

RE: How do they do it?

Cost of living is cheap in China, so its not always sweat shops. Just that one day it will move to another country as the Chinese start to want more luxury in life. A $70 ARF probably cost only $40 when its lands in the US. Your ESCs that cost like $150 at United Hobbies cost only about $70 from the factory. Some nice EP ARFs that cost like $180 actually only cost about $70 landed in the US. They do make that much profit. Shipping is cheap, capitalism is a reality!

RE: How do they do it?

The question is , "How do I do it ? ". I'll spend 700 bucks building a nice scale ship, fly it for a few years, then sell it for 300 bucks ! Slave labor is what this hobby has always been about, wether its in China or at my house.

RE: How do they do it?

But you can't put a price on the enjoyment you recieve from building that plane and watching it fly, and if the next person gets to enjoy that plane as well you are selling happiness right???:D

Flyboy76

RE: How do they do it?

You're comparing some fundamentally different situations. US-based kit-cutting companies wouldn't compare themselves to Asian ARF factories, nor would they compare themselves to the larger kit making companies.

If you want to get started as a kit-cutter, compare yourself to others in that same line of business. http://www.btemodels.com/prices.html would be a closer comparison, but not perfect. Bruce has been pretty successful (in terms of reputation). He kits his own designs, however. You may have to pay some licensing fees if you're kiting someone else's plans.

You can't compete with the mainline ARFs or kits. It's not possible unless you use their methods and practices. You probably don't have experience in importing goods, negotiating international contracts, and marketing. You can't compete with a company places orders for products or materials in huge quantities. The wood you buy changes hands quite a few times before it gets to you, and each of those hands makes a profit. Same with the hardware.

If you want to get started in the business, look how others have started successfully and use their experiences and choices as a guide for your own business plan. You can't look at fundamentally different businesses, such as Hobbico.

RE: How do they do it?

Thanks Mike, what your saying definetley makes sense, comparing myself to others in the same line of business sets the prices more in line and on target with what i was thinking.

Thanks again!

-David

Quote:

ORIGINAL: MikeL

You're comparing some fundamentally different situations. US-based kit-cutting companies wouldn't compare themselves to Asian ARF factories, nor would they compare themselves to the larger kit making companies.

If you want to get started as a kit-cutter, compare yourself to others in that same line of business. http://www.btemodels.com/prices.html would be a closer comparison, but not perfect. Bruce has been pretty successful (in terms of reputation). He kits his own designs, however. You may have to pay some licensing fees if you're kiting someone else's plans.

You can't compete with the mainline ARFs or kits. It's not possible unless you use their methods and practices. You probably don't have experience in importing goods, negotiating international contracts, and marketing. You can't compete with a company places orders for products or materials in huge quantities. The wood you buy changes hands quite a few times before it gets to you, and each of those hands makes a profit. Same with the hardware.

If you want to get started in the business, look how others have started successfully and use their experiences and choices as a guide for your own business plan. You can't look at fundamentally different businesses, such as Hobbico.