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Cost of Adding Sound to a Locomotive


Gerrard
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41 minutes ago, Gerrard said:

 

All valid points Paul, though you can copyright your sounds provided you recorded them originally. Thing is, we'll never know if they're over priced unless someone releases their costs and margins.

 

Yes you can copyright the sound files but are they overpriced at £10-15 which is all they charge for reblowing?

The biggest cost is in the decoder and it’s software at £80-90 not the soundfile. 

Their costs and margins are understandably confidential for obvious reasons or everyone starts using it against you. 
 

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Oh, and I don't recall asserting that anyone was on the fiddle. My words were 'killing' which to me means making an extremely large profit margin.

Lastly, I didn't realise that healthy debate counted as being derogatory?

Ok ‘making a killing’ suggested they were taking excessive advantage or on the fiddle over egging the value? It’s just semantics.  
Sorry but you’ve said their pricing is excessive in your first post and someone is making a killing in the last one but also admitted you don’t know what their margins are, if that’s not the definition of derogatory- critical & disrespectful - of their motives I don’t know what is. 
All I’m saying is before making such assertions back it up with some facts to support them or a product produced in volume at this lower price. 
Hornby have done this with TTS to an extent but it doesn’t have the sophisticated motor control or memory of the more expensive options. It certainly offers value for money but it’s cheaper for a reason. 
I just don’t think your sums will add up from what I’ve seen of the costs of producing small batch specialised electronics but would be delighted to be proved wrong ;) 

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3 minutes ago, PaulRhB said:

 

Yes you can copyright the sound files but are they overpriced at £10-15 which is all they charge for reblowing?

The biggest cost is in the decoder and it’s software at £80-90 not the soundfile. 

Their costs and margins are understandably confidential for obvious reasons or everyone starts using it against you. 
 

Ok ‘making a killing’ suggested they were taking excessive advantage or on the fiddle over egging the value? It’s just semantics.  
Sorry but you’ve said their pricing is excessive in your first post and someone is making a killing in the last one but also admitted you don’t know what their margins are, if that’s not the definition of derogatory- critical & disrespectful - of their motives I don’t know what is. 
All I’m saying is before making such assertions back it up with some facts to support them or a product produced in volume at this lower price. 
Hornby have done this with TTS to an extent but it doesn’t have the sophisticated motor control or memory of the more expensive options. It certainly offers value for money but it’s cheaper for a reason. 
I just don’t think your sums will add up from what I’ve seen of the costs of producing small batch specialised electronics but would be delighted to be proved wrong ;) 

 

I simply asked the question as to whether others feel as I do that they're overpriced. I'd be happy to provide facts to back up my instinct, but as such facts aren't available, I can only tell you my instinct. As I've said previously, I'd be happy to be proven wrong but no one has the numbers except those that don't want to share them.

 

And we'll have to agree to disagree on the semantics of 'derogatory'.

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16 hours ago, Gerrard said:

 

I simply asked the question as to whether others feel as I do that they're overpriced. I'd be happy to provide facts to back up my instinct, but as such facts aren't available, I can only tell you my instinct. As I've said previously, I'd be happy to be proven wrong but no one has the numbers except those that don't want to share them.

 

And we'll have to agree to disagree on the semantics of 'derogatory'.

I assume you have a full time job, if so then work out your total wage per month and how many Sound decoders say at £30.00 profit 'You' would have to sell to make that income.  Also there are other costs involved in the £30.00 profit that make it far less than that actual figure.

 

All you do is learn to program decoders, buy £15,000 of stock, £10,000 worth of equipment and you like all the UK Programming companies 'Can make a Fortune' !!!!!!!!!!!!!

 

Charlie

Edited by charliepetty
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There has not been any mention of "software amortisation,"

Software Amortisation:

The cost of creating software is a fixed cost ,  the price / cost of the software content per device  "when amortised" falls as the number of devices rises( and falls dramatically to the point of near-zero price/device).

Example, a programme has a development cost of a fixed  £1 million,

Load programme to 10 devices:  price  = £100,000 per device.  

Load programme  to  1 million devices: price = £1 per device, 

Load programme  to 100 million devices,: price per device = 1p.

 

Are we saying that the cost of creating a sound file , say £10,000,   is amortised over such a small number of devices, the cost of a sound chip decoder is validated at £100?

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I personally think that the decoders themselves are expensive. I still have loads and will no doubt buy more.

I recently decided to buy a decoder from Coastal DCC for the total price of £92 something. Very cheap. Just to clarify this was a V5 with build able speaker, loaded with class 56 sounds and that price includes postage. Also this was not a reduced price and is available on their website right now (just checked). 
So £15 - £20 for the sound file seems a fair price meaning that the decoder must still be making them a profit at £70 - £75, these are just facts. I really do wonder what the wholesale price is.

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I do not believe Gerrard can sell at £10 a pop and make any money.

 

The hours required to build a sound file even if commercial recordings are used, otherwise sound recording trips all add to the product cost.

 

Then there is the cost of the base decoder. You either commission your own to a spec or buy in standard decoder blanks and put up with low spec or pay for high spec.  Add in the kit to build and load the sound files. Such kit may be fine for one off or low quantity builds, but for large scale production you need either more expensive kit or more sophisticated factory standard kit. I have home user kit and the step up to low volume production kit is noticeable on the wallet.

 

Now add to the mix that the most everyone will only want one or two of a particular loco,  say max of ten of a kind. The average punter will not be buying by the hundred. If you have the likes of major on-line buyers then they will drive your cost into the ground. How many loco variants are you intending to run in what quantity.

 

This brings in the minimum order of quantity for a production build and this is where marketing guesswork comes into play. Do you run one offs on demand or run a thousand, ten thousand, a hundred thousand at a time and then you need a market outlet for them, so that needs setting up at some cost.

 

Speaking of cost - you need the funding up front and may wait some time before seeing any of it back.

 

Sorry to be negative but one must also be realistic about these things.

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2 hours ago, Andy7 said:

I personally think that the decoders themselves are expensive. I still have loads and will no doubt buy more.

I recently decided to buy a decoder from Coastal DCC for the total price of £92 something. Very cheap. Just to clarify this was a V5 with build able speaker, loaded with class 56 sounds and that price includes postage. Also this was not a reduced price and is available on their website right now (just checked). 
So £15 - £20 for the sound file seems a fair price meaning that the decoder must still be making them a profit at £70 - £75, these are just facts. I really do wonder what the wholesale price is.

Well send a blown Zimo back under warranty and it costs £18 odd to replace with a new one (which I consider very fair and a good warranty policy) there is no way they repair the blown decoder, must go straight back into scrap......and there’s no way a company is going to loose money on a warranty claim, I am not complaining but it is telling IMO.

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2 hours ago, RAF96 said:

I do not believe Gerrard can sell at £10 a pop and make any money.

 

The hours required to build a sound file even if commercial recordings are used, otherwise sound recording trips all add to the product cost.

 

Then there is the cost of the base decoder

 

Sorry to be negative but one must also be realistic about these things.

To discuss the costs of decoders I think we have to remove the cost of the software (sound files) completely, I think a lot of people’s perception is the actual hardware is expensive, not the sound files.

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22 minutes ago, boxbrownie said:

Well send a blown Zimo back under warranty and it costs £18 odd to replace with a new one (which I consider very fair and a good warranty policy) there is no way they repair the blown decoder, must go straight back into scrap......and there’s no way a company is going to loose money on a warranty claim, I am not complaining but it is telling IMO.

Yes, they will lose money on a warranty claim.

A manufacturer will not expect a 0% failure rate so will factor in a certain percentage of failures in the original sale price.

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1 hour ago, Richard Croft said:

When one of the big Zimo retailers introduced the £18 exchange system its because customers were having to wait for the faulty decoders to be sent to Austria, be assessed and then wait for a replacement to be sent back to the UK for sound to be loaded and to be sent out. It could take months. The shop introduced a system where they would exchange the decoder straight away for £18 so that you didnt have to wait, which is fair enough because from their point of view there was a danger that the warranty claim might have been rejected so they had to make something to cover that. It seems that the £18 has now become mandatory but don't be mistaken for thinking that's what the retailer pays for the decoders.

 

Richard

I was under no illusion that £18 was what the retailer pays for the decoder, but your saying that the £18 warranty cost is absolutely nothing to do with the manufacturer? 
 

If that is the case then it reaffirms my faith in Zimo decoders and the supply chain as being chaps “that play cricket” :D

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1 hour ago, Pete the Elaner said:

Yes, they will lose money on a warranty claim.

A manufacturer will not expect a 0% failure rate so will factor in a certain percentage of failures in the original sale price.

That’s not a good company policy then, I know for a fact although it’s a slightly different scale that motor manufacturers cover warranty claims within the profit margins on the vehicles, Ill make an exception to that rule with VolksWagon group :D

 

The TGW and Warranty Paid claims are always factored in, to do so is good business sense.

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3 hours ago, boxbrownie said:

 there is no way they repair the blown decoder, must go straight back into scrap......

 

 

I have visited the ZIMO factory in Vienna several times, and I can assure you that there is a repair department where decoders are inspected, repaired and refurbished. I've seen it with my own eyes and spoken to the operatives.

 

This is part of ZIMO's 'green' policy of trying to avoid dumping electronic components into the environment.

 

In most cases, the existing sound project is not affected by the repair, and I can bear witness to this too.

 

BTW, this has nothing to do with the fixed charge for repairs out of warranty.

 

Best regards,

 

Paul

 

 

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1 hour ago, pauliebanger said:

 

 

I have visited the ZIMO factory in Vienna several times, and I can assure you that there is a repair department where decoders are inspected, repaired and refurbished. I've seen it with my own eyes and spoken to the operatives.

 

This is part of ZIMO's 'green' policy of trying to avoid dumping electronic components into the environment.

 

In most cases, the existing sound project is not affected by the repair, and I can bear witness to this too.

 

BTW, this has nothing to do with the fixed charge for repairs out of warranty.

 

Best regards,

 

Paul

 

 

They must be bloody good at surface mount soldering then :lol: because one of the transistor popped on one of mine......but good to hear they have that policy.

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43 minutes ago, pauliebanger said:

 

Of course they are, they work for ZIMO.

It’s just that I had never seen repairs on SM components other than automated on production lines with flooded solder.

 

Are you sure they don’t employee Borrowers? :lol:

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3 hours ago, boxbrownie said:

It’s just that I had never seen repairs on SM components other than automated on production lines with flooded solder.

 

Are you sure they don’t employee Borrowers? :lol:

Hi,

 

So SM component repairs are not done on automated production lines, on any board which fails testing, the repair is done off line by a repair tech who may be using VERY expensive equipment for BGA's, or just tweezers and a soldering iron for resistors and the like.

 

Also 'flooded solder' or wave solder, is definitely not used to solder surface mount components onto a board, if you tried that you would end up with half the components on the floor and the other half in the solder bath.

 

A typical surface mount process is this.

 

1) Use a screen printer to apply solder paste to the solder pads on the bare PCB.

2) Place the components on top of the solder paste using a pick and place machine.

3) Send the assembly through a solder reflow oven, this causes the solder to 'reflow' and make joints between the board and the components.

4) If necessary turn the board over and repeat steps 1 to 3.

5) If through hole components are being used, add them to the board, usually done by hand these days.

6) Put the board on a wave solder carrier, this is a piece of material with holes cut out so that just those areas of the board that need to be soldered are exposed to the solder wave, and send it through the wave solder machine.

7) Test the assembly and repair if necessary.

 

Regards,

 

John P

 

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On 05/04/2020 at 16:55, Gerrard said:

Or perhaps, someone is making a killing?

 

You could be right, but what tends to happen when someone is actually 'making a killing' is that others set up in competition for a slice of the 'easy money', thus driving down profit margins.  Since there's not a rapidly growing range of sound decoder manufacturers, that would suggest that profit margins are perhaps not as high as you might think.  Besides, manufacturers need to make a profit to invest in new products, so the notion that profit is bad is a little misguided.

 

19 hours ago, Pandora said:

Are we saying that the cost of creating a sound file , say £10,000,   is amortised over such a small number of devices, the cost of a sound chip decoder is validated at £100?

 

But no-one sells sound files at £100.  A re-blow, which is purchasing a sound file on its own, will only set you back £15 - £20.  Besides, not all of the costs of producing and selling a sound file are fixed.  Yes, the actual cost of recording and editing the sounds is, but there is also the time to load the sound file onto the decoder (which is a variable cost).  Transaction costs (time spent processing the customers order and sending it out, along with credit card transaction charges) are also a variable cost.  Also, no-one has mentioned Value Added Tax (VAT).   Whilst the producer of a sound file might charge you £18, £3 goes straight to Her Majesty's Government and the sound producer only gets the remaining £15.

 

If you want to buy a combination package, that comprises the hardware, software and sound file, then yes, you may pay £100, but remember that if the seller receives £85 (ex VAT), then it will cost the consumer £102 inclusive of VAT, with £17 of the purchase price going straight to HMG.  The £85 then has to be split between whoever designed the hardware, whoever produced the hardware, whoever wrote the software and whoever produced the sound file.  Each party needs to make a few pounds of profit to make a living as well as cover their own production costs (which includes rent, rates, staff costs, utility costs etc).

 

Cheaper sound decoders would be nice, but ultimately as a consumer, you either pay the price being asked, you do without, or if you really think there is easy money to be made, you set yourself up as a competitor and 'make a killing' yourself.

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Besides, not all of the costs of producing and selling a sound file are fixed  ////  there is also the time to load the sound file onto the decoder (which is a variable cost.

 

If the blank decoder uses ICSP to load the microPic, , the microPic being the CPU/Memory  RISC computerchip of the decoder, it is a few minutes work of connecting a £10 USB-ICSP adaptor, followed by a few c mouse clicks to upload and verify the object file into the decoder and therefore a small cost per unit device

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11 hours ago, jpendle said:

Hi,

 

So SM component repairs are not done on automated production lines, on any board which fails testing, the repair is done off line by a repair tech who may be using VERY expensive equipment for BGA's, or just tweezers and a soldering iron for resistors and the like.

 

Regards,

 

John P

 

Sorry, I didn’t mean to infer that the repairs were made using flooded* technique, obviously for a repair each component would have to be made individually by hand.

 

* As for the “flooded” manufacturing I guess my Japanese isn’t as good as I thought, well to be truthful my Japanese hosts English wasn’t as good as I thought, I saw the process when photographing a production line in Hiroshima at Mazda making ECU boards, I saw the components all placed on the board automatically by machine and then they entered an “oven” (as I understood it) and the solder was applied or melted on.....as I said my host Ken didn’t have the very best English......but he did drink like a fish! :D

 

Thank you for the clarification :good_mini:

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1 hour ago, Richard Croft said:

 

 

I like the fact that you can send a Zimo decoder back out of warranty, and it’s only £18 to have it repaired/exchanged. That’s a great deal. But I don’t think it’s fair to be charged £18 for an in warranty repair

 

Richard

I agree if it’s a manufacturing fault that’s different it should of course be covered FOC, but let’s be honest about this it is likely most “faults” with decoders are due to mishandling or dodgy installations causing that smoke to leak out, when it’s that kind of “fault”....ie caused by an idiot :lol: then I reckon the £18 is a great deal.

 

 

 

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14 hours ago, Pandora said:

Besides, not all of the costs of producing and selling a sound file are fixed  ////  there is also the time to load the sound file onto the decoder (which is a variable cost.

 

If the blank decoder uses ICSP to load the microPic, , the microPic being the CPU/Memory  RISC computerchip of the decoder, it is a few minutes work of connecting a £10 USB-ICSP adaptor, followed by a few c mouse clicks to upload and verify the object file into the decoder and therefore a small cost per unit device

 

It may only be a few minutes work, but it still costs money, which lots of people seem to fail to understand.  The national minimum wage is currently £8.72 per hour.  On top of that employers must pay National Insurance (13.8%) and employer's pension contributions (at least 3%) and provide at least 28 days paid holidays for every 233 worked (which equates to a benefit worth at least 12% of salary).  That means that the cost of employing someone on minimum wage is £8.72 (salary) + £1.20 (NI) +  £0.26 (Pension) + £1.05 (holidays) = £11.23 per hour or about 19p per minute.  I'll ignore other benefits like sick pay, which also have a cost to employers.  Loading a sound file may take just three minutes, but that is more than 50p of an employees time, which is not trivial when compared to the, say, £15 sale price (exclusive of VAT).

 

If it takes another five minutes or thereby to process an order (whether that is locating and e-mailing a file or posting out a decoder), then you have another £1 of variable cost.  Similarly, if the credit card company charges a 5% transaction fee on the £18 (inc VAT) reblow cost, then that's another £0.90 of variable costs that the seller incurs.   Add all of these together and you're probably looking at 15 - 20% of your costs being variable rather than fixed.

 

As for fixed costs, you highlight the cost of producing a sound file, but what about the fixed costs of rent, rates, utility bills etc for retail premises, all of which need to be paid for from the maybe £13 that you have after deducting VAT and variable (labour) costs from the £18 sale price?

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