Author Topic: Profit margin of "premium" membrane keyboards?  (Read 3483 times)

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Offline Ekaros

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Profit margin of "premium" membrane keyboards?
« on: Wed, 28 July 2010, 13:32:49 »
Summa summarum: How much does "gaming" keyboards contain profit aka. Logitech, Microsoft, Razer and such?


Don't know if this has been asked, but as I have began my search for my mechanical keyboard I have found out they are a "bit" pricy. Still for all the individual parts needed and assembly for such it's somewhat understandable...

So to the point, prices from local shops:(local where I live here Finland)
2€-4€ for very basic keyboard
50-100€ for "gaming keyboards"
and finaly
156/170€ for Logitech G19...
Very small comparison from just two shops, but still gives general picture...

If someone can make cheap keyboard for 2€ and they are asking 50 to 100 for "gaming" onces with fancy lights and macro buttons, all fair and squre for those happy users who don't know of better, but still how much they make profit from those?
So I should add something useless here yes? Ok, ok...
Filco 105-key NKRO MX Browns Sw/Fi-layout|IBM Model M 1394545 Lexmark 102-key Finnish-layout 1994-03-22|Cherry G80-3000LQCDE-2 with MX CLEAR
[SIGPIC][/SIGPIC]
Dell AT102W(105-key SF) (Black ALPS)|Steelseries Steelkeys 6G(MX Black) ISO-FI-layout|Cherry G84-4400 G84-4700 Cherry MLs

Offline itlnstln

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Profit margin of "premium" membrane keyboards?
« Reply #1 on: Wed, 28 July 2010, 14:14:12 »
I would say the profit margin is in the 30-40% range. Retailers typically mark prices up by this amount to be able to sell items at discount (whether for a sale or clearance) and still make some profit; there are other reasons for the fairly high profit margin as well (low velocity, other potential shrink, etc.).  Sometimes, the profit margin is even higher than that.  This goes for the major retailers like Best Buy, Newegg, etc.  I don't know what the smaller retailers of specialty keyboards like Elite or The Keyboard Co. mark up their 'boards to, but I wouldn't imagine it's quite as high.


Profit margin of "premium" membrane keyboards?
« Reply #2 on: Wed, 28 July 2010, 14:33:06 »
Profit for who?

Cheap stuff (say, up to about 100 euros) you buy in shops have about 50% markup at the shop (that is, the shop gets around 50% of the price). From that, the shops have to pay their rent, their employees and all other overhead. What's left over is profit for the shops.

The other 50% goes to whoever sells the shop the items.

Actually, that's not quite right: sales tax/VAT takes 20% or so off the top, but that cost is spread around. It's more instructive to just ignore VAT all together and concentrate on the tax-less costs (which is why business-to-business pricing is pretty much always specified without taxes*).

You have to look at the supply chain:

Shop (Local store) <- Franchise organization, if any (Amazingly amazing computers international) <- Importer / Wholesale (may be combined with franchise) <- Manufacturer (Filco) <- Manufacturer of parts or materials [ repeat this stage ] <- Base resources (Metal ore, Crude oil for plastics etc)

At every stage in this process some profit is made (don't forget shipping!) and the consumer price will go up, or the company involved will eventually go bankrupt. Also, larger quantities are cheaper at every stage (for example, a single full set of cherry switches without caps is about as expensive as a fully assembled Filco board, but Maltron claims they buy them for 20 pence each - which is still around 25 euros for a full set).

Also, manufacturing of plastic parts traditionally has a high startup cost because you have to make molds (IIRC on the order of 100,000 euros for larger parts). Not a problem if you're selling millions of items, but that really drives up the cost if you're only selling a few hundred a month. The same is probably true if you want specifically designed metal parts like springs etc - you need to pay for the tooling to make them.

What all of that means is that if you make products out of more (and more intricate) parts, and you want quality guarantees, and you're not selling the items as part of a bigger package, it's going to cost money. Quite a lot more money.

Whoever made the humble hacker board here said those things would cost something like $100 for the plastic enclosure alone for small runs. And that's with innovative "cheap" small-run plastics manufacturing. Add in assembly, controller and switches and you're up to $400 in cost (no profit for the manufacturer yet, and it still has to be sold to consumers too).

If on the other hand you've got 500,000 PCs to sell and you just need "a mouse" and "a keyboard" to go with it, you're going to look for the absolute cheapest **** that people will still accept - probably meaning you build the thing out of a single PCB, one rubbery layer for the domes and the cheapest enclosure and key caps you can find - and you don't care if it breaks in 6 months. You're probably not even interested in making a profit on the keyboard - you're going for profit on the total package.

All in all, I'd be surprised if Filco made more than 20 euros profit on each board they sell, unless they're selling way more in Asia than they appear to do in Western Europe or the US.

* for the Americans, in most countries in Europe VAT is at a fixed rate (per type of product) throughout the country and consumer prices are specified with sales tax included.
Current collection: HHKB Pro 2 black on black, HHKB Pro 2 white/grey blank, [strike]Dell AT101W[/strike] (sold to SirClickAlot), 1992 Model M, Key Tronic Ergoforce KT 2001, BTC 5100 C. Dead boards: MS Natural Elite, MS Natural 4000.