Silly Spares Pricing

[dirkenstein]

Within the past few years I've noticed more and more companies charging what I'd consider frankly outrageous prices for certain spares, especially compared to the open-market costs of the individual parts involved. The thing that bothers me in these cases isn't that the company marks up spares. That's OK, it costs to warehouse and prepare them, and to pay people to do so. It's that firstly, markup is on the order of 500% to 1000% over cost, and that secondly, these are not 'razorblade model' spares in the sense that the base product is subsidised by the sales of spares or consumables, as you find with razors and inkjet printers. These are parts which shouldn't be subject to ordinary wear and tear or need regular replacing like consumables either. They're things that break due to design flaws, severe long-term use or accidental abuse.

 

I just feel it's bad customer service. I'm much more likely to purchase a company's new whizzbang product not only knowing it's reliable, but that the company will work with me to fix it in the field if there are problems (and will not extract its pound of flesh for doing so).

 

 

Examples (names withheld to protect the potentially guilty):

 

Company A)

Part Approximate Open-Market Price

Schottky Rectifier £9

2 Silicone insulating pads £0.60

2 M3 screws, nuts and shaeproofs £0.40

2 insulating washers £0.15

3 faston tabs £0.30

 

Actual kit costs: £52.50 ex. VAT

(NB, the kit includes an instruction sheet and the tabs are pre-soldered to the rectifier)

 

Company B)

PIC16c63a MCU £3

 

Actual cost for spare programmed part: £31.25

 

Now, in case A) the company did provide a tidy kit to make it easier to fit this replacement/upgrade in the field.

Somebody had to solder those tabs to the rectifier, put everything in a bag with the manual and a little drill template.

Maybe at £60 an hour for labour that would up the price to something like the amount it cost.

 

However, I see no reason why the company couldn't have simply:

1) provided the manual and template as a PDF. Assembling the parts isn't hard for a practised electronics technician. Fitting the kit isn't really possible unless you _are_ a practised electronics technician.

2) Listed appropriate parts with RS/Farnell/Mouser/Digikey part codes. The only one that's in any way critical is the rectifier. The other stuff is all standard semiconductor mounting hardware.

3) Marked up the rectifier 50% for keeping old stock; it is slightly difficult to find and possibly going obsolete.

 

In case B, the cost is composed of at least 3 things I can think of:

 

1) Actual part costs + warehousing and overhead

2) Programming costs (maybe 5 minutes on a production PIC programmer)

3) Cost accounting for software development cost recovery and/or software license(s).

 

My objection in this case is that 3) almost certainly dominates here unfairly.

I've already paid the license costs when I bought the device. Why am I paying them again? Lots of software companies will provide spare media or downloads of their software at reasonable costs if you can provide evidence you bought the license in the first plsce.

 

I have a PIC programmer. The most basic PIC programer costs less than the programmed chip does in this case.

If they don't want to warehouse the part, why can't the company make the PIC binary available to program yourself?

 

The PIC has its readout fuses blown, so I can't pull the software myself. And the PIC is sufficiently defective that it probably wouldn't work anyway.

Now I could accept severe pricing the PIC were an extremely rare spare, something that should never need to be replaced.

The fully populated main control board of this device costs more as a spare part than the value of a working secondhand complete unit, for instance.

However, the device as a known failure mode where a melted motor winding takes out the full-bridge driver which takes out the PIC....

 

I can understand that they want to stop people from stealing their trade secrets, so maybe making firmware images available is seen as risky.

The device is electrically and mechanically quite simple, and I suspect with firmware companies in countries with little respect for IP could build knockoffs at a rate of knots. However, it's a 10-year-old design, so hardly novel technology.

 

I can think of another company that wanted to charge me £30 and £15 international shipping for replacing a whole hose assembly when I only needed to replace a plastic lid I could get off one of their fluid bottles for free, provided I was willing to drill two holes in it myself.

 

As a pleasant contrast, Zero 88 have always been extremely helpful and made any spares available at very reasonable prices, provided they were still in stock for some of the frankly ancient products of theirs that I've fixed.

 

How do people feel about this? Am I just being a cheapskate? Is this symptomatic of companies attempting to make all areas of their operations 'profit centres'? Do you think it's good customer service to charge cost price, or even subsidized prices for spares, and bad customer service to try to make a profit off them? Is making your spares department a profit centre just good business sense or even a necessity nowadays, as product reliability improves and modern 'throwaway' culture makes many repairs uneconomical?

[timsabre]

I have a PIC programmer. The most basic PIC programer costs less than the programmed chip does in this case.

If they don't want to warehouse the part, why can't the company make the PIC binary available to program yourself?

 

I can understand that they want to stop people from stealing their trade secrets, so maybe making firmware images available is seen as risky.

 

I think you answered your own question there.

There's too many people out there already trying to rip off the product without making it any easier.

 

Speaking as someone who has been involved in a spares operation, it is a logistical nightmare and it's very expensive to make a good job of it. You get a large number of people ordering the wrong part or fitting it incorrectly and then wanting to send it back for credit. You spend hours on the phone with people who do not know what they are doing. You have to decide whether you subsidise the cost of running the spares dept out of the money you made from selling the product originally, to keep spares at a reasonable price, or whether you will at least try to break even on the costs.

 

I can see how it looks expensive from the end user's point of view, but really it isn't.

[Brian]

To the OP...

 

how much do you think it costs to process a customer's order?

 

That is...

 

accept the order either on-line or over the phone

take payment

raise the internal paperwork

pick the goods

pack the goods

raise the shipping paperwork

ship the goods

[paulears]

I don't think you're being a cheapskate, but my own experience is that many companies treat service as a separate company, expected to stand on it's own. A spares kit seems a good solution to many faults - containing more than you need, but probably cheaper to manage. Breaking things down would seem to probably put up the prices. Some organisations keep spares at component level, for years and years. Vinten is a good example. They have a very efficient spares department, everybody even knows the name of the man who runs it, and pretty well all items down to nuts, bolts, levers and seals are available. However - their spares cost a lot of money. Some could be produced by a local engineering firm cheaper, I'm sure. However - Vinten are always reliable. They even tell you when stocks of spares start to get low. Just recently, a popular, but over 25 year old item has been put on the list of low spares, and people invited to contact the man in the stores for an update. Simply excellent service - but keeping these things so long, and maintaining the system cost money. Other firms keep spares at board rather than component level, and they keep them for less time. You buy a board instead of an IC, but that's life. Some of these also throw out their spares stock when it reaches a certain point.

 

I think that spares are expensive, but spares are probably a full cost item - where all the things you mention are included, plus staff costs, bank costs and all the other sundry expenses a service company incur. Some still see good service as a driver for new sales - eventually. Others perhaps see keeping old items running perhaps as a little unattractive and a possibility of a little extra income?

 

What is certain is that there is nothing we can do afterwards. Maybe when buying, and considering alternative products from other brands, it becomes a lever?

 

I think we even did this same topic years ago - and the conclusion then was that spares were over priced and sometimes you had to buy things you didn't actually need. Nothing has changed?

[dirkenstein]

 

how much do you think it costs to process a customer's order?

 

So charge a small order fee, or set a minimum order size. Or make your spares available only over t'internet to small volume customers or non-trade account holders. But make it clear that I'm paying for the personal attention, and not the part.

[Brian]

So charge a small order fee, or set a minimum order size.

It's a generally accepted rule of thumb that, until you get into an order rate of 50+ orders a day, they cost around £100 each to process

[timtheenchanteruk]

I think I had something similar on here a few years ago, the part was priced at something like £4, the handling charge was £15

 

In the end I bought it, at least then I was guaranteed to have the right part, going off their part numbers.

[dirkenstein]

It's a generally accepted rule of thumb that, until you get into an order rate of 50+ orders a day, they cost around £100 each to process

Interesting- about 2x to 3x what I thought it was. Is that rate based on 50+ orders for identical items or 50+ orders non-configured items from stock? What I mean do you need to be selling 50 identical Acme Sooper-X widget mkIIs on separate orders before your order costs start going down or is it OK for you business to be selling, say 10 or 20 different products from stock (that don't have dozens of options which somebody needs to talk you through or require custom assembly or configuration per order) on 50 separate orders per day?

 

Does internet ordering reduce the costs significantly?

It basically makes it sound like there's no point in small businesses taking individual orders under say £200 to £500 each... so why do they? Customer relations? Lack of business sense? Loss leaders?

[Junior8]

I think they've always seemed dear to the end-user who knows, or suspects they know, the manufacturers list price. Last year the museum where I help out had a seventies exhibition and amongst the magazines on display were some 'Everyday Electronics' from I think 1973. In one of these there was an letter bemoaning the increasing price of components. Yet on another page there was an article with a then well known supplier explaining why they were 'getting out of spares' because they couldn't make any money out of it. So it's not a new thing. Neither is price variation, indeed I have here a Practical Wireless from 1963 where the variation in prices between suppliers for the 'usual' selection of valves was considerable.

 

The fact is running a mail order business is incredibly time consuming - I have friends in the market trade who gaily started eBay shops as a back-up and found themselves swamped. Not by the the number of orders but the time taken to pick and pack the ones that came through. It takes the same time to pick and pack a pair of pliers or two packs of hacksaw blades as a power tool. As for the internet I reckon the only thing it's cut out is some opening of the mail or answering the phone - but against that the distance selling regulations give the punters the right to return anything for a full refund without question. In Fashion 35% comes back, in other sectors (Housewares especially) the returns rate rises to 50%. People who know have told me that keeping an on-line shop up to date is a nightmare, which might be why some of them don't work very well.

 

Re your Zero 88 example. Here the considerable purchase price for equipment pre-supposes that equipment will have a service life of many years (the first Sirius I purchased in 1992 and last touched in 1997 probably hasn't done a total of six months work yet, but represented very significant one-off investment) meaning that a long-term spares operation has to be factored into the cost and allowed for in the list price. They only have a finite inventory of spare to keep too.

 

If you didn't see the C4 programme on the Bath firm selling adult goods the other week it available here and gives really good idea of just how the costs increment in this kind of operation.

[KevinE]

My view in the first instance is that it was their product that failed, they should facilitate the supply of spares. The parts pricing is a very specific thing to different OEMs. Some like Yamaha have extremely reliable products and their spares are cheap as well. Some charge a king's ransom for similar parts for example a well-known DJ-Audio product manufacturer. There is surely no need..the end product is expensive enough as it is.

 

Regarding covering for the DIY faffer or tinkerer, maybe they should refer end-user purchases to specialist distributors like Partmaster or eSpares, leaving the direct sales to the trade.

 

The other thing is the relative price of spares supplied to the UK compared to other countries. QSC, for example, provide prices for their spares to the USA but refer UK clients to Shure UK. Shure's prices are at least treble the cost of ordering from the US, even with carriage charges.

 

Explain!!

[haymere]

My view in the first instance is that it was their product that failed, they should facilitate the supply of spares. The parts pricing is a very specific thing to different OEMs. Some like Yamaha have extremely reliable products and their spares are cheap as well. Some charge a king's ransom for similar parts for example a well-known DJ-Audio product manufacturer. There is surely no need..the end product is expensive enough as it is.

 

Regarding covering for the DIY faffer or tinkerer, maybe they should refer end-user purchases to specialist distributors like Partmaster or eSpares, leaving the direct sales to the trade.

 

The other thing is the relative price of spares supplied to the UK compared to other countries. QSC, for example, provide prices for their spares to the USA but refer UK clients to Shure UK. Shure's prices are at least treble the cost of ordering from the US, even with carriage charges.

 

Explain!!

 

We bought a Soundcraft Radio Desk at auction from BBC Radio Scotland. All the desk were ripped out so minus their PSU cables. I believe it is Hirose connectors but I have seen prices quotes of £150 just for a cable. Thats unbelievable just for a cable so next week I am gonna try and workout the pin outs and swap it over for 7pin XLRs

[bruce]

We bought a Soundcraft Radio Desk at auction from BBC Radio Scotland. All the desk were ripped out so minus their PSU cables. I believe it is Hirose connectors but I have seen prices quotes of £150 just for a cable. Thats unbelievable just for a cable so next week I am gonna try and workout the pin outs and swap it over for 7pin XLRs

 

If it's a CPS150, the connector you need is the Hirose JR13-series - 5 pin chassis connector is about 3 pounds from RS, 7 pounds for the cable-mount one. If it's the bigger PSU (450?), then I'm pretty sure it's the same series of connectors.

 

Pin-out is in the manual for the PSU.

 

more here

[Brian]

Is that rate based on 50+ orders for identical items or 50+ orders non-configured items from stock?

Like all rules of thumb it's an average.

 

In general it takes no more effort to process an order for a new LX desk than it does for half a dozen fader caps.

 

Does internet ordering reduce the costs significantly?

Not for small companies.

 

Complete end-to-end systems as used by people like RS/Farnell/Amazon are hugely expensive to install and run.

 

The reality for small companies is that the internet order ends up as an email from the shopping cart system which then gets processed as if it was a phone order.

 

It basically makes it sound like there's no point in small businesses taking individual orders under say £200 to £500 each... so why do they? Customer relations? Lack of business sense? Loss leaders?

All of the above reasons.

[Paul J Need]

Very interest thread here.

As we run a fairly busy interwebby shop I was curious about the cost of processing an order comments. I guess if we had just one order this week it would cost in the region of £6,000 to process, regardless of whether is was for £3.00 or £3,000+VAT, rent, rates, bills, wages, tax, phones, web hosting, blah blah etc etc etc............... Small order surcharges we tried a few years ago and customers did not like that very much.

 

It's quite refreshing to read this and know that there are people out there who understand what is involved. Due to what I call Ebay culture, people wanting equipment and spares now, cheap as chips with free delivery.

 

Spares generally do not come with the same discount from the manufacturer as the item the spare goes in.

[Stuart91]

It's quite refreshing to read this and know that there are people out there who understand what is involved. Due to what I call Ebay culture, people wanting equipment and spares now, cheap as chips with free delivery.

 

I'm pretty sure that many of the small sellers operating shops on eBay aren't making much money at all. But it raises expectations and poisons the market for many other people.