KB_S1 wrote on Fri, 26 November 2010 12:35 |
Also the startup costs only have been discussed here. How much per unit? What would be genuine amortisation levels required?
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That's the right question and the real problem.
The tooling is $500K. I believe that the materials could be made again, however, since no one is currently producing them, going and finding a company in the US (or somewhere) who COULD produce them and then working with them to get it right would probably take about 18 months, a lot of development costs and a large minimum order. Then another 12-24 months would be needed to "practice" making the tubes and fine tuning the production process, destroying raw materials in the process.
A VERY rough ROI (return on investment) scenario looks something like this:
* $1-1.5M cash investment to get to the first acceptable production units ready for sale (maybe)
* 3-4 years until that end result is realized or it is determined that more time and money must be invested or the project should be killed
* Market demand and product pricing is purely a guess at this point
Pending the price, the profit level and the rate of sales, you may be looking at covering the original investment 6 years after the initial investment. That's a tough sell to any investor. I don't think that it is impossible, but it will take someone who loves microphones AND has $3M (in case round one doesn't work or the estimates are wrong...) that they are prepared to just throw away if the project does not succeed in the end.
Joe Hauck
AMI, Inc.