Unit Cost And Economics

A project log for VT-69 Handheld Terminal

It's a dumb terminal. You can connect a Raspberry Pi to it.

BenchoffBenchoff 05/01/2019 at 04:123 Comments

Right now, I have the schematic and design done enough that I can get some quotes and go through the actual cost engineering of the VT-69. The TL;DR, is that this would cost more than you would pay.

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Electronics get cheaper as you buy more. This is a simple fact that one resistor from mouser costs ten cents, and a thousand resistors from mouser costs a dollar. It's like this with injection molding and silicone keyboards, too: the first silicone keyboard costs five thousand dollars, and a thousand silicone keyboards cost six thousand dollars. The more I can sell, the less it will cost. This is especially important when it comes to very small quantities, and no one in #badgelife that is sane is doing more than 1000 units. I did that, it was hell.

So we come to the unit economics of the VT-69. Here's the price graph for just the populated PCB:

One costs $220, and that doesn't include a keyboard, screen, battery, or really anything else. If I were to only make one, I would sell it for a thousand dollars.

I'm going to cut to the chase here with the total cost of quantity 100, 500, and 1000:

Producing 100 units costs $16,000. Producing 500 costs almost $40,000, and producing 1000 costs almost $60,000. This is the cost of goods sold, and not reflective of any actual price. To look at that, you need a margin and I wouldn't be comfortable with anything less than a 30% margin (If I'm only building 100, I would need to charge $225 per badge for a 30% margin. For quantity 500, I would charge $107.03 for a 30% margin. For quantity 1000, the price comes down to $83). Your iPhone, for example, has a 60-70% margin. Take money transfer, logistics, and all that stuff and that 30% margin gets eaten up pretty quick.

Now, here's where it gets tricky. I know people aren't going to pay much more than $100, and I need a higher margin to put the money back into the project so I can manufacture the *back* of the plastic enclosure. I need to make a lot of these, and I need to charge a lot. Sorry.

I'm going to be straight with you: this is fucking expensive, and the only way that this will work is that the first 500 pays for the next 500, and then it's self-sustaining. This effectively means a 50% margin, meaning you would pay $160 per badgeI don't think that's going to happen. I just don't think the market is there.

I'm not saying Def Con is cancelled,  but this is hard. 

That said, the significant cost of this is in the tooling. The first keyboard cost four grand, and the thousandth keyboard cost a dollar. Stuff like that. Here's where it gets trippy. This is my cost after all the molding and tooling is paid off:

That's reasonable. That's not bad. I can do that all day. I'd pull the trigger now if that were the case.

The entire goal of this project was to do a badge with silicone keyboards and a plastic bezel, simply because no one has done that before. Why has no one done that before? Here's your answer.


limor wrote 05/01/2019 at 06:03 point

OK first up skip the RA8875 and use this screen, you can write to it with 8-bit/16-bit

if you use arduino to drive the display you can get fast blitting w/8 or 16 but you wont be able to buffer the whole screen

for text it'll be fine. on the SAMD51 we do DMA for 8-bit but maybe you dont need that

then if you like you can plug the Pi into the back, you can have it drive the display directly with the TFT driver built into the Pi - takes all your pins almost, but you could use the '21 as a USB-keyboard/mouse (get resistive touch its nearly free). follow this product schem

you also dont need a backlight boost anymore because that screen has the LEDs in parallel (may want to get a cheapy constant-current driver instead)

i'd need to see a schem to do any more cutting.

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limor wrote 05/01/2019 at 04:44 point

to check, do you want any help with cutting your BOM cost? if so, please post your BOM up, even if its rough, couldn't find it linked anywhere here (but also didnt look that hard)

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Benchoff wrote 05/01/2019 at 05:43 point

That's linked here:

If you have a tip on getting the RA8875 for less that $5/piece, that would be awesome. Other than that, the only major costs are the ATSAMD21J18 and the power sections. It's honestly a _pretty minimal_ circuit. Biggest cost is the display, and I'm struggling to find that for less than $10/piece.

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