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Bulk discount estimations?

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Bytesunfish

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Hey all,

I'm developing my product and I'm trying to get some preliminary idea on pricing. Some parts are easy to estimate while others have proven really difficult. For instance, there is a component I'll need that sells for $850 retail, but I know that the company I work for gets them for about $110 because we use it with ridiculous volume, have great purchasing and stocking agreements, a long good business relationship, etc. Logic tells me that I'll be able to get this component for somewhere in between. I'm just not sure where. I'm not at a point where I can really predict my usage since I haven't gone to market. I imagine I'll have to go through a distributor at first, rather than straight to the manufacturer. I'm at the pretty early stages of design. Are there any good resources out there for predicting what I can expect?

I know the obvious answer will eventually be contact a sales rep (duh), but I'm so far from an initial purchase that I don't want to go through that door quite yet. Do I need to bite the bullet or are there some good estimating practices that I can use to get me by until I'm closer to being ready to spend the cash?
 
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Walter Hay

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Sep 13, 2014
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Hey all,

I'm developing my product and I'm trying to get some preliminary idea on pricing. Some parts are easy to estimate while others have proven really difficult. For instance, there is a component I'll need that sells for $850 retail, but I know that the company I work for gets them for about $110 because we use it with ridiculous volume, have great purchasing and stocking agreements, a long good business relationship, etc. Logic tells me that I'll be able to get this component for somewhere in between. I'm just not sure where. I'm not at a point where I can really predict my usage since I haven't gone to market. I imagine I'll have to go through a distributor at first, rather than straight to the manufacturer. I'm at the pretty early stages of design. Are there any good resources out there for predicting what I can expect?

I know the obvious answer will eventually be contact a sales rep (duh), but I'm so far from an initial purchase that I don't want to go through that door quite yet. Do I need to bite the bullet or are there some good estimating practices that I can use to get me by until I'm closer to being ready to spend the cash?
Whether you are buying components in the USA or in China, the attitude to volume discounts will be very different.

In the US you will usually find that manufacturers have a structured price list with price breaks at set quantities.

In China, price breaks are not set in concrete, and will depend on your negotiating skills. Your knowledge of the price acceptable for a certain quantity can help in that process. Westerners usually expect big discounts for big orders, but in reality they are usually quite a low % off the original price quoted. There are exceptions, and quoted low prices can sometimes be used as bait, and at other times may be genuine because of excess capacity that was not expected.

Being still a long way off being ready to order, one approach you could take is to make your initial inquiries in a false business name, with a gmail address specifically for that purpose. This can apply wherever you are sourcing.

In any case, unless forced to do so I would not go through a distributor.

Walter
 

ThirtyOne

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Jul 18, 2017
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I know the obvious answer will eventually be contact a sales rep (duh), but I'm so far from an initial purchase that I don't want to go through that door quite yet. Do I need to bite the bullet or are there some good estimating practices that I can use to get me by until I'm closer to being ready to spend the cash?

I honestly think you answered your own question here. What bullet is there to bite except asking? Get quotes for varying orders (100, 1000, 10k, 100k) from a few manufacturers. That way, you have something better than a guess and a sheet to work with in negotiating later. Good luck.
 

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