> The cost of building a consumer audio product is generally no more than 30% of retail. 30% COGS (cost of goods sold) is virtually a maximum for items sold at mainstream retailers.
There’s nothing wrong with this. These are standard ratios, not some dirty secret.
The cost of goods sold is only a fraction of the costs that go into getting products all the way into the customers’ hands and supporting them (customer support, warranty replacements, lost shipments, fraudulent orders, etc.). That’s not even counting the R&D investment costs that go into making the product, as the post says.
Salaries, warehousing, shipping, insurance, and all of the others costs of doing business add up.
It’s not actually realistic to expect an entire company to be selling you a $300 product that costs them something like $250 to build. Every business in existence must build in enough margin to pay the people who do all of the work to make it happen and support it.
If this seems shocking, consider that the COGS of software as a service products are much lower by comparison. Doesn’t matter, though, because you have to pay all of those expensive salaries to make it happen.
There’s nothing wrong with this. These are standard ratios, not some dirty secret.
The cost of goods sold is only a fraction of the costs that go into getting products all the way into the customers’ hands and supporting them (customer support, warranty replacements, lost shipments, fraudulent orders, etc.). That’s not even counting the R&D investment costs that go into making the product, as the post says.
Salaries, warehousing, shipping, insurance, and all of the others costs of doing business add up.
It’s not actually realistic to expect an entire company to be selling you a $300 product that costs them something like $250 to build. Every business in existence must build in enough margin to pay the people who do all of the work to make it happen and support it.
If this seems shocking, consider that the COGS of software as a service products are much lower by comparison. Doesn’t matter, though, because you have to pay all of those expensive salaries to make it happen.