Some insight into module selection process
2001-07-09 by Paul Schreiber
Several points (all good and valid) have been brought up, so here's a quick
run-down of my semi-organized thought processes.
These are in order of how I judge which module to do next.
1) Demand
First, I assume that *any* module will have a decent demand, but the magic
number is *50*. I try to determine
if I can sell 50 modules within 45 days. This is to recover the cost of
paying my suppliers, then shipping modules
to recover the costs plus a little (and I do mean little) extra. There are
about 20 subscribers, so 30 modules are
then taken up by the 'normal channels' as I call it.
2 years ago, the magic number was 30. That was a little easier to hit.
2) Workload
Workload means:
design (which entails risk)
breadoard/test
mechanical (panel)
PCB layout
ordering parts
writing the manual
kitting
For example, the MOTM-910 was about a small of workload as possible. The
MOTM-300 and '440 represent the
largest (to date) workloads. The MOTM-130 is ALSO a large workload. The
Pulse Divider is medium and the MicroVCO
is low-to-medium.
3) ROI (return on investment)
This is a fancy accounting term for profit :) But it factors in effort and a
time-scale. Some modules I really don't pressure
myself to have a large ROI (the '960 and '940). Some modules take YEARS to
show decent ROI ('700) while others
shoot out of the gate ('101 and '830).
When I had 60 customers (all kit builders) and was operating about 1/5th of
the pace today, I really didn't concern
myself with ROI. But with nearly 230 customers in 12 countries and me
averaging 30 modules/week shipping,
"Paul's little hobby" is a $250,000/yr business. Suddenly, the cash flow and
inventory issues require MUCH more attention that many people realize.
Having modules with good ROI means that I don't have to worry as much about
"breaking even" within my 45 day window.
About pricing: I think MOTM is priced fairly, if even on the low side. My
after-tax profit margin is about 18%. So,
you say to yourself "Hey! An extra 45K in the bank is not too shabby." Well,
that's true to a point, but before I
focused on MOTM, I designed DSP emulators for TI and I was making $300,000
after-tax PROFIT on them! For
*less* effort. So, MOTM is just a 'labor of love'. Think $13/hr. That's
about it.
4) Mental state
Let's face it: all modular owners are at the mercy of singular
personalities. Examples:
Rex @ Serge: No web support, erratic. Ships in 7 months. No new design work.
No technical docs.
Phil @ CMS: nice guy, but tends to look for the 'home run' order. Currently
building a system for Hans Zimmer.
Roger @ synth.com: Nice guy, doesn't like to talk on the phone. Runs synths
in the background (like me).
Jurgi @ Technosaurus: Nice guy. Wife had baby, went on 6 month haitus. Very
$$$ (rumor is only 3 systems in US).
Grant @ Wirad: Nice guy, good support. Trying to figure out what to do next.
Don't think he invisioned the workload.
Dieter @ Doepfer: Lots of selection, if you like the form factor and quality
level. Lack of technical docs.
Paul @ MOTM: Nice guy, but getting a little frazzled. Best employee left for
'real' job. Shipping varies from quick
to lost in never-never land. Designs new modules at erratic pace. But end
product is superior to everything.
The MOTM-130 is the LEAST attractive to me *currently*, just due to past 6
months of workload. That's NOT to say
it won't be done. On the contrary, it MUST get done. I will get the
resistors sequenced on tape, so that reduces the
kitting workoad tremendously.
I'm not going to decide this month anyway. Too busy shipping! But I hope
this sheds some light on what goes on
in my excuse-for-a-brain.
Paul S.