“What Is Your Hardware Business Gross Margin?”

What Is Your Hardware Business Gross Margin? – Feld Thoughts.

I expect over the next year there will be 174 VC-based content marketing posts about how to build a successful hardware business. If they emulate the 3,671 posts about SaaS-based businesses, there will be plenty that discuss gross margin and how to think about it. Hopefully they’ll include a bunch of derivative metrics around pricing, BOM, shipping, and channel mix. Maybe they’ll even include information at different scale points of the business and tie the metrics to marketing and sales expense.

A really long time ago, Ladyada sketched out what margins for a kit business looked like (and later Chris Anderson did a good job with a version too).

12. Find the project that is easiest for you to sell/re-create. Figure out what a full price list would cost if you made 100 of these, getting the best pricing you can. Now allow for a 40% profit, or about a 66% markup.Now add the markup again. This is your retail cost. So if your project is $10 in parts, wholesale is $16.50, retail is $27.50. $25-$75 retail price range is a good one to start with.

Generally speaking at Adafruit when we make something we try to make sure there are enough margins for resellers, if you can do that, you’ll be able to sell to others, who can sell to others.