I personally would stay away from such a deal.
First of all, 10% is high in my opinion.
Let's say your prototype's actual cost is $ 1000.
You get this to work and order a volume of 1000 pieces the first year.
Let's assume your product costs $ 20 per piece to manufacture.
That's a total bill of 1000 x $ 20 = $ 20,000.
Now, 10% of $ 20,000 are $ 2000.
So you already pay double the first year ($ 1000 vs $ 2000).
Imagine what happens when you really have success...
What happens if you want to take your product and have it produced elsewhere?
This deal only benefits the manufacturer.
First of all, 10% is high in my opinion.
Let's say your prototype's actual cost is $ 1000.
You get this to work and order a volume of 1000 pieces the first year.
Let's assume your product costs $ 20 per piece to manufacture.
That's a total bill of 1000 x $ 20 = $ 20,000.
Now, 10% of $ 20,000 are $ 2000.
So you already pay double the first year ($ 1000 vs $ 2000).
Imagine what happens when you really have success...
What happens if you want to take your product and have it produced elsewhere?
This deal only benefits the manufacturer.
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