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Cost/Benefit analysis of a real case. The impact on unit price of R&D, tooling and certifications costs. What about inventory? This guide to let you understand the real global cost of an hardware product line.
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MAKE OR BUY? How Flyport changes the game
Creating a line of connected products supporting Wi-Fi, GPRS
and Ethernet connectivity:
A complete cost analysis
CASE description Your company wants to create a complete line of Smart power meters with Wi-Fi, GPRS and Ethernet connection.
Two possible solutions:
#3 products from scratch
just #1 carrier board that fits 3 different Flyport modules (wi-fi, GPRS, Ethernet)
MAKE
BUY
Startup
R&D (Schematic and PCB design)
Tooling (PCB&SMT manufacturing)
Inventory
Certification (CE for example)
Your suppliers normally have a minimum order quantity of 100pcs/product
Investments needed
R&D and Tooling (Wi-Fi version)
#3 CE certification cost
4.500€
4.000€
3.000€
4.000€
TOTAL 15.500€
ESTIMATED TIME TO MARKET 8 months
R&D and Tooling (GPRS version)
R&D and Tooling (Ethernet version)
Startup investment if you MAKE
R&D and Tooling (Carrier board for Flyport)
#3 CE certification costs*
1.500€
2.500€
TOTAL 4.000€
ESTIMATED TIME TO MARKET 3 months
* Flyport module are CE precertified, so there’s a saving
Startup investment if you BUY
If you create your 3 products from scratch you will optimize BOM and you don’t pay the margin we have on Flyport. So let’s say you save 10€/pc on average.
Complete product with WiFi 35€
Complete product with GPRS 40€
Complete product with Ethernet 25€
Carrier board + Flyport Wi-Fi 45€
MAKE
BUY (carrier board 15€+Flyport module)
Carrier board + Flyport GPRS 50€
Carrier board + Flyport Ethernet 35€
Costs analisys based on
100pcs
Variable costs (per unit)
But…are you really sure you save these 10€/pc?
And what about the inventory cost to start
production?
What’s the startup capital impact on the first 1000pcs? 15.500€/1000pcs = 15,5€/pc
Suppliers typically ask for minimum 100 pcs for each board:
Complete product with WiFi
Complete product with GPRS
Complete product with Ethernet
Carrier board
3500€ 4000€
2500€
1.500€
MAKE
BUY (carrier board 15€+Flyport module)
11.000€
You can buy the exact number and models of Flyport you need according to market needs!
Inventory cost
You can afford high R&D and tooling costs
You sell more than 5.000pcs/year
You know exactly how many pcs you need with Wi-Fi, with GPRS and with Ethernet
MAKE is convenient if
You have money to invest in inventory
You can wait 8 months to go to market
You want to go to market as soon as possible
You sell less than 5.000 pcs/year
You don’t know exactly how many pcs you need with Wi-Fi, with GPRS and with Ethernet
BUY is convenient if
You don’t want to invest too much money to in inventory
You want to keep the risk of development as low as possible using a well tested solution (like Flyport)
EnOcean Alliace Member Meeting | Graham Martin
| 22 June 2012
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system on module (SOM) with embedded Internet
connectivity.
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EnOcean Alliace Member Meeting | Graham Martin
| 22 June 2012
FlyportPRO The ultimate version of Flyport modules for professional use only. It's extremely small and with 96Kbyte Ram, 64Kbyte
EEPROM and 16Mbit Flash for web server and FOTA
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