Kickstarter for enthusiast products (was: Aux switch with LED)

Digital Lounge
#1

The recent discussions on the Aux switch with LED/etc highlights Inovelli’s dilemma when producing both for a business/large-volume need (a more basic, but Inovelli-branded Aux switch) vs producing for an enthusiast audience (a full-featured Aux with multi-tap, LED etc). Two different markets, two different products.

The full-featured product has higher cost, higher risk and likely lower sales. This seems like a good candidate for Kickstarter - Inovelli puts the switch on Kickstarter as a project, with rewards that make sense (switches! more switches!, caps!) at a price that is profitable, likely with a limited production run initially. Folk who are interested can pledge as appropriate.

If the response is good enough, then production goes forward with a known initial run (and perhaps coming into the regular product-line). If there is not enough interest, then that is known and all that is lost is the time to run the kickstarter. Thoughts ?

(Apologies if this has been suggested already)

@Eric_Inovelli

1 Like
#2

Hey @robf22 – thanks so much for starting this thread and thinking of ways to help – that really means a lot!

It’s definitely been brought up before (Kickstarter/Indiegogo, etc) and I think the hardest pill to swallow for me is that typically these products take about $80-100k worth of R&D to create (engineering costs, UL, FCC/IC, Z-Wave/ZigBee certifications, etc) – it’s actually crazy lol.

So, the break-even to produce some of these products would be pretty high, and if we were to pull it off, we have to consider the long-term probability of the product to survive based on different factors (pricing usually being the main culprit).

To give a more specific break-down, we can use the LED Aux Switch as an example.

Development Costs: $100k USD
MSRP (Non-Kickstarter): $30 USD
Kickstarter Price: $25 USD

Cost from Manufacturer: $12 USD (ok, I spilled the beans lol)
Tariff: 25% of $12 = $3 USD
Shipping From Manufacturer (Sea Freight) + Customs Fees, etc = $0.75 USD
Shipping to Customer = $4.00 USD
Kickstarter Commission = 5% = $1.25 USD
Stripe Commission (CC Processor) = 3% = $0.75 USD
Total COGS = $21.75

Kickstarter Price Per Unit = $25.00
Total COGS Per Unit = $21.75
Total Profit Per Unit = $3.25

Breakeven to pay for Development Costs
$100k/$3.25 = 30,770 units :exploding_head:

That’s about what our yearly forecast is for the aux switch, so it may take a year or so to complete.

Then the problem becomes, bumping up the aux switch to $30 after the kickstarter is completed. I’m not sure people will pay for that when they can buy the normal switch for $35 after that.

Anyway, I have been tinkering with the idea of KS/IGG for some other projects, but as you can see, it’s actually very difficult to pull off :frowning:

One thing we could do is open it up on our site as a, “kick-starter” type page (maybe we make it a section on the site). At least we’d be able to save the 5% commission. But, even then, it would have to make sense from a pricing POV.

Hope that helps give some clarity?

I really do appreciate the thought and I’m hoping that one day, we’ll just have enough money to not worry about it lol!

4 Likes
#3

So we just need to get 32k pre-orders on Kickstarter :wink:

#4

You guys got this, I believe in you!

Maybe I’ll open up a poll to see what ppl think will happen first:

  • 32k pre-orders
  • Biden gets rid of the 25% tariff
1 Like
#5

Sounds like either way we win :slight_smile:

#6

Lol, 32k is more likely to to happen then the other one at this point.

1 Like
#7

I’m in for 20, so we are down to 31,980 . . .

5 Likes
#8

Thanks for thoughtful reply @Eric_Inovelli. On using the Inovelli site as a pseudo-Kickstarter, I noticed that Amazon has just started doing that - they have some fancy Diane von Furstenburg branded Amazon Echoes that will only be produced if enough people pre-order them.

#9

I might be able to use 3-4 of these (not a ton) and I think the idea here to get them to market is pretty good; but while reading this thread, this jumps out at me …

Why only $25? … with this being a product with an undetermined long term demand, why not fund it with a 10,000 unit pre-order goal and make the preorder price $32.50 (or more). Consider the $2.50 (or more) over anticipated retail price the premium to get access to a product that might never exist otherwise.

Not sure how doable 10k pre-ordered units is either, but its far more likely than 30,770, I think.

Not all pre-order scenario’s need discounting as an incentive; sometimes it’s just the desire to have the thing in question - In this case, I’d chip in a small premium on a few to help get the ball rolling. :slight_smile:

Just some thoughts; feel free to disregard, my wife usually does. :roll_eyes:

4 Likes
#10

:rofl: truth

2 Likes
#11

I’m in! I need aux switches with multi tap capability.

1 Like
#12

I’m sure that this must have been discussed somewhere, but should we be looking at making the Red Switch with Aux capabilities, versus an Aux switch with Red Switch capabilities? Make the Traveler on the Red Switch bidirectional? For those of us that want the extra Aux capability, it’s a reasonable premium. I know that you can make it work with many hubs today, but I prefer that the switches maintain standalone functionality. Just a thought.

#13

I think you’re referring to the hardwired connection that @Eric_Inovelli was talking about here. That is planned for future generations of Z-Wave switches per that thread.

#14

Thanks @rohan, I assumed that it must have been discussed somewhere, but seems like the best solution…a cheap Aux with LED is just not commercially viable…

1 Like
#15

I’d pay double the tariff expense if it could be sourced somewhere in NA. But I also understand that a domestic supply chain doesn’t exist for this product category, so it’s a difficult position.

#16

This makes sense - by definition folk who participate in Kickstarters tend to be invested in the company/project and price is far from the most significant factor.

Heck, I backed a Kickstarter a while back that I really wanted to get funded and just donated $$ extra so the target could be met. Nothing at all to do with price/unit, it was being able to help make a product I wanted available.