8 ms·

$100 profit on a $150 watch would be crazy. Rest of the post seems made up too. I don't know where these numbers are coming from. I'm genuinely confused.

apparent 2y ago
I was using a blended average of the $150 and $225 watches. Also, it sounds like some of the components for the $150 watch were literally left over from Pebble days, which means they could have gotten an amazing deal on them.
IshKebab 1y ago
Nah that's pretty typical, depending on what you mean by "profit".
- ac29 1y ago
  Right, that is presumably gross profit per unit, not net. Net profit could easily be zero or negative.
roboror 1y ago
Not crazy at all in consumer electronics, that's margin on the parts only. R&D, admin, software, etc. costs need to be recovered from that money.
beambot 1y ago
MSRP of 3x COGS is a pretty common rule of thumb for hardware. Have to leave room for distribution, software, R&D, returns, SG&A, etc. End of the day, it's probably still only 30-40% gross margin -- less than half of a good SaaS company. Hardware is (indeed!) hard.
- cenamus 1y ago
  But then how could you call that 100 profit in any way? If you made at most like 30-50?
  - roboror 1y ago
    [flagged]
    - bigstrat2003 1y ago
      That makes no sense. Profit, by definition, is net. If you still have to pay costs out of some money, then it isn't profit.
      - KAMSPioneer 1y ago
        Gross and net profit are each their own concept: https://www.investopedia.com/ask/answers/101314/what-are-differences-between-gross-profit-and-net-income.asp https://www.investopedia.com/ask/answers/101314/what-are-dif...
        bigstrat2003 1y ago
        What they call "gross profit" is not profit, by definition. It's certainly useful to track $revenue-$cost_of_goods, but you can't call that profit. People are free to use words incorrectly, but they shouldn't expect anyone else to go along with them.
        ActivePattern 1y ago
        Who chooses the "correct" use of words? Is it you? Wikipedia disagrees with you: https://en.wikipedia.org/wiki/Gross_margin https://en.wikipedia.org/wiki/Gross_margin. Maybe you should make your own encyclopedia.
        colecut 1y ago
        you mean some person on wikipedia disagrees with him.
        chgs 1y ago
- scyzoryk_xyz 1y ago
  Having worked in a tiny start-up-turned-company doing hardware for medical training, my biggest takeaway was that it is very slow but that it can also be very stable. Like, yeah our margins were/are super high, and so were/are the distributors’, but once everything was spun up and running it was also very stable and predictable. We were located on the outskirts of a 3rd tier Eastern European city and yet we were plugged right into the same global parts supply chain and capable of doing the same global distribution you could elsewhere. If you’re on to something, it’s a good time to be doing hardware. But you’re correct - 2/3 of the entire company was distribution/sales and R&D.

apparent 2y ago

I was using a blended average of the $150 and $225 watches. Also, it sounds like some of the components for the $150 watch were literally left over from Pebble days, which means they could have gotten an amazing deal on them.

IshKebab 1y ago

Nah that's pretty typical, depending on what you mean by "profit".

ac29 1y ago
Right, that is presumably gross profit per unit, not net. Net profit could easily be zero or negative.

roboror 1y ago

Not crazy at all in consumer electronics, that's margin on the parts only. R&D, admin, software, etc. costs need to be recovered from that money.

beambot 1y ago

MSRP of 3x COGS is a pretty common rule of thumb for hardware. Have to leave room for distribution, software, R&D, returns, SG&A, etc. End of the day, it's probably still only 30-40% gross margin -- less than half of a good SaaS company. Hardware is (indeed!) hard.

cenamus 1y ago
But then how could you call that 100 profit in any way? If you made at most like 30-50?
- roboror 1y ago
  [flagged]
  - bigstrat2003 1y ago
    That makes no sense. Profit, by definition, is net. If you still have to pay costs out of some money, then it isn't profit.
    - KAMSPioneer 1y ago
      Gross and net profit are each their own concept: https://www.investopedia.com/ask/answers/101314/what-are-differences-between-gross-profit-and-net-income.asp https://www.investopedia.com/ask/answers/101314/what-are-dif...
      - bigstrat2003 1y ago
        What they call "gross profit" is not profit, by definition. It's certainly useful to track $revenue-$cost_of_goods, but you can't call that profit. People are free to use words incorrectly, but they shouldn't expect anyone else to go along with them.
        ActivePattern 1y ago
        Who chooses the "correct" use of words? Is it you? Wikipedia disagrees with you: https://en.wikipedia.org/wiki/Gross_margin https://en.wikipedia.org/wiki/Gross_margin. Maybe you should make your own encyclopedia.
        colecut 1y ago
        you mean some person on wikipedia disagrees with him.
        chgs 1y ago
scyzoryk_xyz 1y ago
Having worked in a tiny start-up-turned-company doing hardware for medical training, my biggest takeaway was that it is very slow but that it can also be very stable. Like, yeah our margins were/are super high, and so were/are the distributors’, but once everything was spun up and running it was also very stable and predictable. We were located on the outskirts of a 3rd tier Eastern European city and yet we were plugged right into the same global parts supply chain and capable of doing the same global distribution you could elsewhere. If you’re on to something, it’s a good time to be doing hardware. But you’re correct - 2/3 of the entire company was distribution/sales and R&D.