Why resin kits are expensive - with actual numbers

[robertburns]

Lets set this straight right now. I am, as of the 13th of this month, a 72 year old practicing public account. I have operated my small business accounting practice here in Central Florida for over 25 years. I earned a 4 year degree from an accredited university and majored in both accounting and economics. 4.0 g.p.a. in econ and 3.7 g.p.a. in accounting. People pay me good money for this type of information. Bob, you are so far off base that it's pathetic. Profit margin is the difference between sale price and c.g.s and is earnings. That's why a person goes into business. Interest is a return on investment. Either way, profit margin or r.o.i., it's all one thing. Earnings.   

how would you crunch my numbers?

[robertburns]

He didn't call them pulls, he called them good shots and used a number of 25 per mold.

pulls/shots - all the same

[Xingu]

His labor should not be included in the cost of goods sold.

 

Send me your bosses' number, I wish to inform him that you will now be working for free.

[Xingu]

how would you crunch my numbers?

Apparently your profit margin is much larger than you thought.

 

[robertburns]

Robert- Very good post and I would like to point something out that a lot of uninformed people discount when looking at models.  You are valuing your time at $15 an hour!  Try to get skilled craftsman here on SoCal for any where near that price!  Anyone with skills is going for $50 minimum.  I have always contended that people with skills are under valued and you made that point abundantly clear.  

thank you Pete and yes that's a good point. You're right that time is undervalued. I look at it this way:

My hourly rate at work is slightly above this rate and I do almost the same thing (but without the project management part of it)

I don't do this as my primary income, and don't wish to. If I did, I would have to charge more, but do to car modelers buying habits, I would sell less and have to make more range of smaller kits to compensate. $50 per hour would make it out of reach for most people. I do it in my leisure and is my part of the hobby  

Artists rates, as you said, are almost always undervalued. I accept this as a fact to deal with.

I see it as good practice to learn business and project management skills. For me that's a cheaper education. 

 

Your post brings up a great point for others others wanting to get into resin casting. 

Ask yourself Why you want to do this:  Learn, make a living, have satisfaction, have a hobby, or a little of each? Knowing these questions and answers will help determine your experience 

 

[bobthehobbyguy]

By the logic of not charging for your own time you shouldn't charge for resin or mold making materials if you had them already. 

[my66s55]

how would I know if I made a profit if I didn't quantify the hours that I spent making it?

You would do as you did, and a fine job doing it I might add, but exclude your labor and add a comfortable profit margin to reach a desire result. The method of breakdown in cost is very good to prove your point and the inclusion of you labor helps drive home to those who need to see it. The cost accounting method of profit and loss is more realist in my opinion and gives a real picture of p & l. With it, you would not incur a profit until you reach a break even point. I.e. all expenses were recovered and everything over that is profit. If you paid out $k for resin as an example, no profit is realize until that $k and and all other expenses have been earned. It's the risk of doing business and why only 2 to 3 start up small business's survive past the first year or so.     

[Harry P.]

An easy way to think about this is that volume equals lower per unit cost.

A model manufacturer has to spend a certain amount of money in order to manufacture the first model... the more models manufactured from the same "pot" of money, the less each unit will cost to manufacture.

On the other hand, a resin caster can only manufacture a very limited amount of product from his "pot" of money, so the cost per unit is much, much higher.

[426-Hemi]

OK I agree on most of this, BUT I'ma "Old Timer" I don't PHOTO PRINT anything, I MACHINE (by hand mind you, NOT CNC metal machine work at all), its done to a TRUE "Hands-ON" Machinist style..... BY my own 2 hands.....  So in that part of my end of molding making my own "masters" I have hours in some, days in others, and weeks in some, and then YEARS in the more harder ones..... So whats my "rate of pay per hour" at that point? No one can judge this! Its what the molder is willing to do, and what he wants.... ANY ONE OF US, you can't put a price on that!

For me? as long as there's an interest, and most times 8 out of 10, I'd rather TRADE my work then make a buck, as I can't "sell" enough "resin parts" to get one of the "grail" offers I've gotten! OR if I do, theres WAY more work in amount of resin to sell then is actually "sold" (I supply a local hobby shop) my prices are low, my quality is high (those that have gotten my resin can vouch for that!) ...and I'm lucky to sell enough to cover the cost of making the mold, and the cost of the resin to cast it. (I do manage this every month) but at times its a REAL CLOSE CALL! I even machine my own Billet Aluminum parts, ALSO by hand on the lathe, and I make better trades then I would EVER selling them! -I only choose to supply the local hobby shop to pay for the costs to allow me to keep trading my own work!

[my66s55]

pulls/shots - all the same

This was intended for Lysleder. His post was just before mine. 

[bobthehobbyguy]

thank you Pete and yes that's a good point. You're right that time is undervalued. I look at it this way:

My hourly rate at work is slightly above this rate and I do almost the same thing (but without the project management part of it)

I don't do this as my primary income, and don't wish to. If I did, I would have to charge more, but do to car modelers buying habits, I would sell less and have to make more range of smaller kits to compensate. $50 per hour would make it out of reach for most people. I do it in my leisure and is my part of the hobby  

Artists rates, as you said, are almost always undervalued. I accept this as a fact to deal with.

I see it as good practice to learn business and project management skills. For me that's a cheaper education. 

 

Your post brings up a great point for others others wanting to get into resin casting. 

Ask yourself Why you want to do this:  Learn, make a living, have satisfaction, have a hobby, or a little of each? Knowing these questions and answers will help determine your experience 

 

Robert thank you for taking the time for providing this information. You have provided some great hands on information.

[robertburns]

You would do as you did, and a fine job doing it I might add, but exclude your labor and add a comfortable profit margin to reach a desire result. The method of breakdown in cost is very good to prove your point and the inclusion of you labor helps drive home to those who need to see it. The cost accounting method of profit and loss is more realist in my opinion and gives a real picture of p & l. With it, you would not incur a profit until you reach a break even point. I.e. all expenses were recovered and everything over that is profit. If you paid out $k for resin as an example, no profit is realize until that $k and and all other expenses have been earned. It's the risk of doing business and why only 2 to 3 start up small business's survive past the first year or so.     

thank you. But I still don't know how I would know how I made a profit if I didn't quantify my hours spent making one kit. Also, what if I trade it to other resin casters (I've done it in the past)

What if I spent 100 hours making it?

can you you please give me an example using my numbers in the previous page?

[1930fordpickup]

I understand your prices and I think that you are undervaluing your shop rate. I feel that the price you charge for the future liner is fine. It's your product you get to set the price. 

[Pete J.]

Robert, you have already brought up something that is important in your calculation.  That is what you make at a similar "regular" job.  What you make there can be classified as "opportunity cost".  In other words, when you spend time on making and casting your parts, you have "lost" the opportunity to make your regular wage.  In a perfect economic situation you would always compare that opportunity cost to anything you did and make a rational decision on what was in your best interest.  However that is not the real world.  There are many intangibles that you have already mentioned.  The pleasure you get from creating your own product, the skills you develop, the knowledge that you get and contacts that you make doing this are real, if quantifiable facts. All this considered only you can decide what your time and effort is worth.  Creativity has always be hard to value.  If we went solely on cost of goods sold, a Picasso or Rembrandt would only be worth the few dollars that went into the paint and canvas.   

[my66s55]

thank you. But I still don't know how I would know how I made a profit if I didn't quantify my hours spent making one kit. Also, what if I trade it to other resin casters (I've done it in the past)

What if I spent 100 hours making it?

can you you please give me an example using my numbers in the previous page?

Sorry for the delay. This thing locked up on me and I couldn't post a reply. If you trade, the item you received has a value. That becomes your sale price of the item traded and the profit is that value less the cost of the item you traded. Traded Future liner valued at $165 for items values at $166. Your profit increased $1.

  If you have a profit margin of $100 and spent 1 hour earning it, you are happy. If you have a profit margin of $100 and spend 20 hrs earning it, your not going to be very happy. At that point you either raise you price or quit.

[my66s55]

 If we went solely on cost of goods sold, a Picasso or Rembrandt would only be worth the few dollars that went into the paint and canvas

 

You forget one basic economic factor in this statement. Price is somewhat related to supply and demand. Cost of goods sold is a cost accounting figure used to set profit margins and monitor profits. It contains both fixed and variable costs and variable costs can change.  

[bobthehobbyguy]

Hopefully we can now get back to our regularly scheduled subject. 

[Dave Van]

I didn't spend any time fact checking or number crunching your data.........one reason is I am a ex-resin producer. 

I produced a few kits before throwing in the towel.  The cost is more than silicon, resin and other media.....it's all the time to create masters to stuffing boxes (a lot of time for a full detail kit.) I enjoyed my time producing kits.....but the effort start to finish took it's toll. I had masters complete or near for 3 other kits that will never see production.  The main reason is the cost....in time and money. 

My last kit.....

[robertburns]

 

  If you have a profit margin of $100 and spent 1 hour earning it, you are happy. If you have a profit margin of $100 and spend 20 hrs earning it, your not going to be very happy. At that point you either raise you price or quit.

seems like a round about way of saying the same thing I did. I still have to keep track of my hours and put a monetary value on it. Only, in this case add it up at the end instead of the middle. Anyway, thank you for your comments

[robertburns]

Hopefully we can now get back to our regularly scheduled subject. 

Thank you Bob for this and your earlier comment. Yes, moving right along

[Ace-Garageguy]

Interesting. I work for myself as a subcontractor providing technical services to other companies that essentially re-sell my services at a substantial markup. I sure as hell bill for my time, as well as any material expense I incur, and short-lived tools or equipment that may be necessary to perform a particular task.

Right now, I'm "mastering" a set of custom parts for a full-scale Jaguar, and I'll be making the tooling to duplicate them, as well as manufacturing the production pieces.

And I bill for every minute of it.

The selling price of the products I develop is usually not established until we find out HOW LONG it takes me to produce masters and tooling, what that equates to in expenses and wages paid to me, and how much money per-unit has to be added to amortize the development cost...based on projected sales numbers.

 

[robertburns]

I understand your prices and I think that you are undervaluing your shop rate. I feel that the price you charge for the future liner is fine. It's your product you get to set the price. 

Thank you. Yes, my rates are low in the model car world. It's based in what I think I can get for the kits. In the Sci Fi genre, I'm able to go a lot higher. I've sold small kits for $400 and large kits for $1250 so it all equals out. If I only did car stuff, it probably wouldn't work out, but the Sci Fi parts make it worth it

 It's all good. I get my fill serving the communities I love by making cool stuff. 

[robertburns]

I didn't spend any time fact checking or number crunching your data.........one reason is I am a ex-resin producer. 

I produced a few kits before throwing in the towel.  The cost is more than silicon, resin and other media.....it's all the time to create masters to stuffing boxes (a lot of time for a full detail kit.) I enjoyed my time producing kits.....but the effort start to finish took it's toll. I had masters complete or near for 3 other kits that will never see production.  The main reason is the cost....in time and money.

 

 

That's a cool kit! 

I hear ya. I added time for stuffing boxes but did not add time for creating masters. In this case, the master pattern cost was repaid in the first run. This is the second run but the master was modified, which was listed. I'll be adding master pattern cost in the next two project posts. Included would be research, correspondence with vendors, etc. One was 3D printed and the other modified from a kit. 

I'd really like to get more of your input (and other casters here) because my costs (and ways of adding them up ?)will be different from yours. 

[my66s55]

seems like a round about way of saying the same thing I did. I still have to keep track of my hours and put a monetary value on it. Only, in this case add it up at the end instead of the middle. Anyway, thank you for your comments

Your welcome. I hope they help you. That is a fine model you have created.

[Dave Van]

That's a cool kit! 

I hear ya. I added time for stuffing boxes but did not add time for creating masters. In this case, the master pattern cost was repaid in the first run. This is the second run but the master was modified, which was listed. I'll be adding master pattern cost in the next two project posts. Included would be research, correspondence with vendors, etc. One was 3D printed and the other modified from a kit. 

I'd really like to get more of your input (and other casters here) because my costs (and ways of adding them up ?)will be different from yours. 

Thanks.....I love your subject having seen a real one I want a model.....but I have 5000+ plastic kits and 200++ resin kits looking at me now.....maybe if I sell some I can justify bringing another one home.