wow. I paid 1299 and got 4 gigs less. I knew there was a lot of profit on these units. Why did they lower them soo much?

As empeg, we made about 30% margin on units - a $1199 unit would have cost us about $850 to make. You can say "there's no way it cost $850 to make", but you'd be wrong; that's how much low-volume manufacturing costs. If we could have made them for $500, they'd have been selling for $700.

The new pricing comes from reduced production costs and a desire to open up the product to people who previously couldn't afford it.

Hugo

Increased capacity is more a cause of lowered prices my drive manufactuers...

32GB (JUST UPGRADED!) Mk. II BLUE
Detroit, MI USA
www.PfeifferBeer.com

damn so when I paid 1299 I think you made 389 from me. I feel raped! ;(


and I just reffered a friend about getting one...

Hey, if you feel that isn't fair, considering the man-years of work that go into the player's hardware and software - feel free to buy the parts yourself and try building an equivalently sized unit with the space spec for anything less than $5000.

This isn't a PC - we don't just buy parts, put them together, and sell it. We develop stuff. If you look into it, PC makers (Dell, etc) make in the 20-30% range profit on sales, and more often than not they just get Intel to design the boards and pay MS for the OS.

You know that when you buy a pair of shoes (as an example that I know about), say for $100, the shop makes typically $50, the distributor makes around $15, and the manufacturer takes the rest.

This is how people get paid.

Hugo

WTF??? A company doesn't have a right to make 30% margin on a product? They're not selling canned goods or pork bellies, they're selling a high technology product. There is a premium to pay for a product as advanced as the Empeg. If 30% was too much margin, nobody would be buying them.

What's with all this whining about paying so much? Are you unhappy with the product? You paid what you paid when you paid it, and at the time, it seemed like a good purchase or you wouldn't have done so, right???

I'm sick of people whining about the high cost. I'm not made of money by any stretch but I feel I paid a fair (though high) price for my empeg. The price is going down now, but I had the pleasure of owning my empeg for almost a full year now. Prices fall, that's how things work.

In a year or whenever, will you be complaining that if you had saved your $1299, you could have bought a Mark 3 player?

-Tony
MkII #554

Maybe some people don't understand what kind of advantage they have....;-) I am sure we are early adopters, but we have our fun....

I have my fun every day, when I drive with my car on the road!

Empeg is a great device and the price was everytime ok!

cm

I think Silvercas was kidding.

He was kidding, right?

___________
Tony Fabris

yeah Im kidding around alittle. I did want this and It is superior to the mkt of mp3 car players.. ahhh I know the strongarm processor cost $5 in bulk

Jeez. You sound like somebody who just bought a pair of speakers at Bob's Stereo Barn and felt cheated when you found out they were on sale down the street at Ed's Audio for $10 less.

I think it is great that prices have dropped a bit so that maybe more folks will be able to take the Empeg leap. Yes, this must in part be due to lower drive prices (which will continue to make our existing Empegs "cheaper" on a $/GB basis as we upgrade drive space) but perhaps also due to the Rio company's willingness to risk slightly lower margins for the time being assuming that they'll make it up on volume as their sales and marketing picks up.

I say "risk" intentionally. When I first got on the waiting list for my unit, I did a little mental exercise of "how many units would they have to sell at X margin to make Y numbers of dollars to cover payroll (for continuing development)". I knew margins *better* be high. My biggest concern was that the company might make a great product but go out of business! Well, they're still here, and they're even the types of folks who will tell you what their margin is.

So, don't feel raped. Feel lucky.

Jim

Most people who are kidding use :) instead of :( ... Or a "j/k" or something.

-Tony
MkII #554

the strongarm processor cost $5 in bulk

aaaagh, silvercas, there you didn't do it *again*. Do you mean:

$5 in bulk , or
$5 in bulk




Henno
mk2 6 nr 6

ahhh I know the strongarm processor cost $5 in bulk

Ermmmm... try $55 in the quantity we were buying. If you increase to 10,000 off the price goes down to $25 - bargain! You can't get StrongARM's for $5 anywhere, in any quantity.

Do you also know that the internal and external wiring looms cost $56, the metalwork wasn't cheap, it goes on and on.

That 30% margin then has to pay for a development team, customer support team, offices, overheads, marketing, etc etc etc. Nobody got rich.

Rob

And is that bulk in lots of 100's, 1,000's or 10,000's? The more you buy, the more you save!

Either way, every ARM processor sold adds to my stock value.
Oh yeah, buy more cell phones, too!

Dave Clark
Austin, Texas
12g Blue MK2
S/N 80000329

In reply to:

---

That 30% margin then has to pay for a development team, customer support team, offices, overheads, marketing, etc etc etc. Nobody got rich.

---

And T-shirts! If Empeg's margin was only 10%, we would never have gotten those free Rio t-shirts!

(see how effective a smiley is in conveying sarcasm?)

-Tony
MkII #554

Ahh, If one can't afford, don't buy. Thats my opinion...

TommyE

Nobody got rich.

I am disappointed to hear that. If anybody in the world should have made a LOT of money, it's the guys@empeg.

The talent demonstrated in design and engineering; the financial risks taken by going into production; the drive, the commitment, the hard work and long hours to see the project through; the extraordinary personal service given before and after the sale; all these things deserve to be richly rewarded.

I hope that Rio paid literally millions for empeg!

tanstaafl.

"There Ain't No Such Thing As A Free Lunch"

Jeez, I've complained about price as much as anyone (when they had the price drop), but 30% is hardly an unreasonable margin, especially for this kind of cutting edge product and the kind of customer support that comes with it.

Again, sorry Rob for being so hostile about the price drop before. I was in a bad mood because in the span of a couple of days I lost all 1,100 of my mp3's and wrecked my car, so then when I learned that I could have saved some much needed cash by waiting a week to purchase the player, my bubble of frustration burst.

Adam

ahhh I love when I get these facts.. I just like to know this stuff. Thanks :)

That 30% margin then has to pay for a development team, customer support team, offices, overheads, marketing, etc etc etc.

And, of course, all the Curry food and the cases of Guinness...

___________
Tony Fabris

Don't forget the great aftersales support and service AND all the continued development and upgrades. Well worth the price.

_______________________

Steve - 18GB Mk II Blue

Don't forget $20 just for those bloody connectors from Farnells on the Mk1 !

__
Unit serial number 47 (was 330 in the queue)...

Hm, I suppose those $850 is just manufacturing cost? I see no way for it to cover development cost based on only one or two thousand units. This is not generally considered very tactfull to ask, but have you managed to break even before selling to SB? I doubt it (hm, perhaps through those development projects for third parties, but even then just barely)...

I second Doug's sentiment: hope SB acquired empeg for an awfull lot of money (and I mean money, not their stock - I am sorry, guys@SB, but I had more faith in long-term survival of stand-alone empeg than SB).

Cheers!



Dragi "Bonzi" Raos
Zagreb, Croatia
Q#5196, MkII#80000376, 18GB green

That's gross margin - clearly net was much lower. The odds are stacked against small business manufacturing, except in very niche vertical markets (but heh, it was fun).

The price paid for empeg has been reported. The word "bargain" comes to mind

Rob

What is it with the Guinness thing?? (This thread has been going round and round on one of our beta test lists as well recently). It's revolting stuff and I only know of two empeg types who drink it!

Rob

If it makes you feel better, Hugo does now have a very fast car!

Rob

The price paid for empeg has been reported. The word "bargain" comes to mind

Hey, where?! Or better yet, tell us (since it is technically public)!

Dragi "Bonzi" Raos
Zagreb, Croatia
Q#5196, MkII#80000376, 18GB green

Here

I'm not going to post any comments on the topic, because there are all sorts of laws about that (and I already got in trouble once!)

Rob

Hmm, well, for SB bargain, to be sure (if they don't screw up). For founders.... It depends on one's life outlook (you know, 'better sparrow in one's hand than pigeon in the tree', as Croatian proverb goes). I think I would have taken it, especially if I had reason to believe new owners would take good care about the product and staff.

I was once in similar situation, and, in restrospact, made the wrong decision.

Dragi "Bonzi" Raos
Zagreb, Croatia
Q#5196, MkII#80000376, 18GB green

I only know of two empeg types who drink it!

That's 20% of your adult staff ! You call that *only* ??!?

Henno
mk2 6 nr 6

That's 20% of your adult staff !

Hmm, what's their child labor drink, then?

(What's the drinking age in England anyway?)

___________
Tony Fabris

> Nobody got rich
Allowe me, you don't have to justify yourself in any way... Even if somebody did, we all should be happy about it. We all decided to buy an empeg, which implies that we all decided deliberatedly that the price asked was fair compared to what we were getting.
The whole point is here: empeg company made an offer, you accepted it. That's it. It means that YOU found it good, and in its turn this means that by definition it WAS good, since this is a luxury good, nothing you can't live without, and if you decided to buy than that means if was fair for you. Nobody forced you.
Empeg people don't even have to come and tell you what's their mairgin.
BUT they did, and this shows honesty and fairness. And I think we all should appreciate this, as their customers.
Next time, if you don't think price is fair, don't buy.

Taym
______________________________
MK II BLUE 12GB 090000923

according to my UK friends... drinking age is 18.

12gig red mk2 -- 080000125

1.9 mill thats it? who accepted this offer HUGO?

In reply to:

---

What is it with the Guinness thing?? (This thread has been going round and round on one of our beta test lists as well recently). It's revolting stuff and I only know of two empeg types who drink it!

---

Amen to that

Geoff
---- -------
Got one of the first Mark 2 empegs...

In reply to:

---

according to my UK friends... drinking age is 18.

---

Bizarrely, I am pretty sure that it is perfectly legal to drink in one's own home from the age of 5 (yes, five!) in the UK (it's not recommended though, and most parents would probably frown on it!!)

Other than that, it's usually 18, yes!

Geoff
---- -------
Got one of the first Mark 2 empegs...

What is it with the Guinness thing?? ... It's revolting stuff and I only know of two empeg types who drink it!

Careful there...

Borislav, wearing one of his 'Lovely day for a Guinness' shirts

My parents used to feed us cider (around 4% alcohol) with sunday lunch every week - from the age of about 5 or 6. Only one glass, though. We didn't even realise it was alcoholic until much later.

Personally, I think it's a good idea not to reserve alcohol until later, as the discovery is usually a lot more painful - europeans are even better at this, where 12 year olds can appreciate a good wine with a meal.

Hugo

In fact, no age restriction on alcohol in Italy, if you may be interested in knowing this. And there's no problem whatsoever with anybody, here, about that. :)

Taym
______________________________
MK II BLUE 12GB 090000923

Sure you can Rob ...

- go to the harbour in Antwerp (others most likely work too)
- wait for a container of StrongArm processors to arrive
- pay off the people unloading it to claim they dropped it and lost half the load in the water.
- drive like a bat from hell when chased by the police

Average cost then is easily 5 bucks or less.

Only one reason why I haven't done it myself ... No hi-tech stuff is ever shipped to Belgium least of all strong arm processors.

And just to make sure : JUST KIDDING

Cheers,
Hans


Mk2 - Blue & Red - 080000431

Looking at their fridge it looks more like Red Bull actually ...

Did you guys (empeg) ever get that Pizza oven anyways ?



Cheers,
Hans


Mk2 - Blue & Red - 080000431

In reply to:

---

That's 20% of your adult staff !

---

Hang on Henno, you implying they partake in enforcing child labour ? Or are you saying that not all of them deserve to be called an 'adult' ?

Cheers,
Hans


Mk2 - Blue & Red - 080000431

How about those aftermarket cell phone adapters that you can buy for $29.99 (cdn.) from most cellular dealers when it only costs them $3.00 (cdn.) to buy. I hope you've never bought one of those!! :)


#170... I got SN: 080000101 12 gig Blue!

Hmmm, now you mention it, I seem to remember enjoying the odd glass of cider with Sunday dinner myself as a child... but it was only apple juice, right?

Yes, suddenly being confronted with a huge choice of beer, cider & spirits at 18 can be a pretty dangerous proposition as I recall!! Being let loose on a Saturday night at 33 can be just as tricky though, if Sunday mornings are anything to go by!

Geoff
---- -------
Got one of the first Mark 2 empegs...

I agree, the cask conditioned ale y'all got over there is much better than any Guinness I've ever had. I quaffed many a Director's Bitter while over the pond last November, can't wait to get back for more...

Dave Clark
Austin, Texas
12g Blue MK2
S/N 80000329

hahaha true I cant agree more.. actually I always get mine free when I buy a new cellular

Dell, Compaq, etc don't make 30% margins. They'd be sitting pretty with 30% margins. Their margins are considerably lower than that and they continually slide lower. For example, over the last few months, Dell's gross profit margins were in the 15-18% range and that included the higher margin server products. Operating profit margins were in the 5-8% range. Dell is known as one of the better firms in the business; Compaq's personal computer margins are in the mid to low teens (although it's overall gross margins are about 25%). Gateway's margins for non-PC items (software, etc) are in the high 30% bringing their overall margins to 20-22% - meaning their PC margins are also in the low teens.

But that's not the issue. The real issue is that there isn't any scalability in the manufacturing right now. Ramp up Empeg sales and everyone benefits (except old Empeg owners). How do you do that? Get some bizdev going and bump up the sales - there's no reason for Empeg not to have multiple channels of distribution. A deal with Visteon (audio OEM for automobiles), a deal with the automobile manufacturers, deals with the shops who sell car audio equipment should all have been done by now. Up the sales, up the number of Empegs produced, watch the costs go way down and (at current prices) see margins go way up.

Thanks for the tip, we may never have worked that out!

Rob

:)

figured i'd get a mildly sarcastic response. suppose i deserved it.