Why are primary lights so expensive?

[OMANDIVER]

Time has come to buy a new canister light for cave diving. Suddenly struck by the fact that a reasonable one costs the same as a Macbook Pro. How can that be? It's just ridiculous. There a quite a few manufacturers so there should be some price competition but guess what there just isn't. Its just a lithium ( mainly ) battery ( same as a Mac) , plastic holder or alloy battery holder, Led lights, very ordinary piece of cable, some very basic electronic switching gear and the light head compartment. In some cases just an on/off switch, plus a few accessories like a battery charger. Is it just economies of scale? Then why so many brands? Or is it like SPGs, all made in the same Italian factory and rebranded? The margins on these lights must he huge.

 

[Caveeagle]

The short answer is Supply vs Demand, and the cost of a low production items with limited competition.

You are also in a market where the high "cost of entry" is accepted and even promoted by some. I remember talking with a Dive Shop owner in the early 90's.. Trying to decide on whether should make my next purchase be a $350 Aladin dive computer, or a $450 AUL canister light. His only comment/advice was: "You really need both".. and "This is not a cheap sport". It was just my impression, but there has always been a bit of a condescending attitude towards anyone trying to moderate the cost impact of 'Tech Diving'. I think it is even more prevalent in cost of certification/training. The cost of some classes I see posted is just sort of shocking.

I suppose the other side of the argument is: Folks dedicating their life to building and supplying high quality equipment deserve to make a living. So, if you don't want the producer of your "Super Studly Canister Light" to have to cut grass on the side, you have to pay enough for them to make/sell this small production item and turn a respectable profit. I don't pretend to know all the players, but I have met some of them, and I don't think they are challenging the Forbes 500 list anytime soon.

Options that I have considered are to buy used gear from known respectable divers who take care of their gear. I don't feel like I need to own the latest gadget, and am typically happy to fly a generation (or two) behind the cutting edge technology for a %50 discount.

 

[tbone1004]

I have a bit of insight into this, so I'll tread lightly. You are 100% wrong on the margins on these things being huge, in actuality the good mfg's, UWLD, Light Monkey etc have surprisingly low margins because the cost is very high to produce. You want to see real insane margins? Check out the recreational side with 100% markup as standard from the dealers, not including the markup already there so the MFG makes their money. Same with DPV's, the reason you never see stuff like this on sale is because there is no room to mark anything down.

You say li-ion like a macbook, correct, however these packs are significantly larger, typically 2x-3x and have to be custom made. They now also have to be certified which is very expensive. It costs on average $5k to certify a new battery pack in this market, that isn't cheap. The actual cost of most of the battery packs to the mfg is somewhere around $300, give or take, so write that down.

Scale- the big light mfg's, Light Monkey, Dive Rite, UWLD, etc may sell a grand total, combined, globally, of 3000 lights per year. IF they're all lucky. That doesn't leave a lot of room for mass manufacture. Except for final assembly, everything in a macbook pro is completely automated in terms of the boards being soldered, etc etc. These lights have to be hand assembled including soldering on all of the connectors, etc etc. There is no way to automate this, especially considering the scale. Man hours of assembly per light are high call it 4 for easy math, and since they can't afford to have full time staff building them, they have to pay themselves, so call it $100 in man hours of assembly at $25/hour, write it down.

Machining. All of the stuff has to be milled because economy of scale says that moulding them doesn't make sense. Shearwater FINALLY hit the economy of scale where it made more sense to mould instead of mill and they released the Perdix. The Petrel is 4 years old, and the company is 12, with a far higher demand, and employ somewhere around 30 full time staff. UWLD has 1, Light Monkey has 3 I think? The machine time alone per product is somewhere around $100

Raw Materials, very high quality materials going into these lights to depth rate them as deep as they are. Aluminum, custom glass optics *at least in UWLD, everyone else is using off the shelf*, delrin rods, etc. $200 or so for the charger and misc raw materials.

Ish call that $700 for a run of the mill standard light. MFG has to make some money to cover the costs of running a business and hopefully making profit to warrant the effort etc so call it $900, and then the dealers have to make some money to warrant selling them so call it $1100. Right around tthe price of the Dive Rite LX25, the base UWLD, Light Monkey 21w etc. Prices go up for various improvements in terms of bigger batteries, more powerful light output etc etc all of which have to be properly designed.

I know the price models and yes they make money, but not a huge amount of it, and they deserve to make money because otherwise they wouldn't have devoted their careers to do it. You want cheap primaries, go to Asia where they are using inferior raw materials and cheap labor. Big Blue, Ano, DRiS brand etc etc but if you want the real deal you have to be willing to pay for it. Apple has factories dedicated to nothing but mass produced products and I promise you that they make a LOT more money per product than companies like UWLD, but they also have to invest in those factories etc etc. There is simply not enough divers in the world that need canister lights to be able to have the costs come down on stuff like this. High quality products are expensive no matter what industry you're in, especially when they have to be tested to things like 200m depth limits, and be durable enough to be abused so you don't break anything etc etc

 

[Bennno]

Suddenly struck by the fact that a reasonable one costs the same as a Macbook Pro. How can that be?

A Mac is a mass product produced in a country were workers hardly make any money. A can light is a niche product that's basically handmade by small companies in the US and Europe.

I think I'd be very hard to get rich by making and selling scuba gear.

 

[Caveeagle]

I don't think Tom even covered cost like overhead and insurance. I suspect we might see an increase in pricing if they were ever forced to pay themselves the $15/hr all the McDonald's employees are demanding.

 

[OMANDIVER]

I have a bit of insight into this, so I'll tread lightly. You are 100% wrong on the margins on these things being huge, in actuality the good mfg's, UWLD, Light Monkey etc have surprisingly low margins because the cost is very high to produce. You want to see real insane margins? Check out the recreational side with 100% markup as standard from the dealers, not including the markup already there so the MFG makes their money. Same with DPV's, the reason you never see stuff like this on sale is because there is no room to mark anything down.

You say li-ion like a macbook, correct, however these packs are significantly larger, typically 2x-3x and have to be custom made. They now also have to be certified which is very expensive. It costs on average $5k to certify a new battery pack in this market, that isn't cheap. The actual cost of most of the battery packs to the mfg is somewhere around $300, give or take, so write that down.

Scale- the big light mfg's, Light Monkey, Dive Rite, UWLD, etc may sell a grand total, combined, globally, of 3000 lights per year. IF they're all lucky. That doesn't leave a lot of room for mass manufacture. Except for final assembly, everything in a macbook pro is completely automated in terms of the boards being soldered, etc etc. These lights have to be hand assembled including soldering on all of the connectors, etc etc. There is no way to automate this, especially considering the scale. Man hours of assembly per light are high call it 4 for easy math, and since they can't afford to have full time staff building them, they have to pay themselves, so call it $100 in man hours of assembly at $25/hour, write it down.

Machining. All of the stuff has to be milled because economy of scale says that moulding them doesn't make sense. Shearwater FINALLY hit the economy of scale where it made more sense to mould instead of mill and they released the Perdix. The Petrel is 4 years old, and the company is 12, with a far higher demand, and employ somewhere around 30 full time staff. UWLD has 1, Light Monkey has 3 I think? The machine time alone per product is somewhere around $100

Raw Materials, very high quality materials going into these lights to depth rate them as deep as they are. Aluminum, custom glass optics *at least in UWLD, everyone else is using off the shelf*, delrin rods, etc. $200 or so for the charger and misc raw materials.

Ish call that $700 for a run of the mill standard light. MFG has to make some money to cover the costs of running a business and hopefully making profit to warrant the effort etc so call it $900, and then the dealers have to make some money to warrant selling them so call it $1100. Right around tthe price of the Dive Rite LX25, the base UWLD, Light Monkey 21w etc. Prices go up for various improvements in terms of bigger batteries, more powerful light output etc etc all of which have to be properly designed.

I know the price models and yes they make money, but not a huge amount of it, and they deserve to make money because otherwise they wouldn't have devoted their careers to do it. You want cheap primaries, go to Asia where they are using inferior raw materials and cheap labor. Big Blue, Ano, DRiS brand etc etc but if you want the real deal you have to be willing to pay for it. Apple has factories dedicated to nothing but mass produced products and I promise you that they make a LOT more money per product than companies like UWLD, but they also have to invest in those factories etc etc. There is simply not enough divers in the world that need canister lights to be able to have the costs come down on stuff like this. High quality products are expensive no matter what industry you're in, especially when they have to be tested to things like 200m depth limits, and be durable enough to be abused so you don't break anything etc etc

Thank You thats a very comprehensive and useful analysis and for me a good education.

 

[tbone1004]

relax gents.... we can all play nice in the sandbox.

Take the numbers with a very large grain of salt, both the pricing numbers *the specific breakdown is different by MFG, but the margins are all about right*, and the volume. The total number of needed canisters would be expected to go up with the tech diving certs increasing year over year, but if you think about this light below
Deep 6 Backup Light
This is able to put out more light than a 10w HID, and do so for an hour. It is $100, and is easily put on the hand. For normal ocean technical diving, I would go with that over a canister any day of the week. Small, cheap, basically disposable, and enough burn time on high for me to have quite a bit of bottom time with no problems. I use a canister because I cave dive, and I like a lot of light and a lot of burn time, I have to pay for it though, and I'm ok with that

 

[cool_hardware52]

Look i understand if you make these things you might be pissed with me. Its a reasonable question and i think has been very well answered, although not by you.

Inquiring about things you don't understand is great, ridiculing them is without merit.

Had you asked "Why are can lights priced at $XX?" and avoided the calls for ridicule and baseless claims of "high margins" no doubt you would have received the same specific answers regarding
the realities of canister light manufacturing.

BTW, I have never produced dive lights, but I do have a bit of experience in low volume, highly engineered products, the costs associated with them, many of which the consumer has no idea even exist, and the enormous cost per unit for overhead, promotion, and customer service.

Tobin

 

[uncfnp]

Perhaps you dislike the wording but it is a legitimate question. When I first started looking at cave courses and saw the price of canister lights I asked myself the same question. What aspect of the design and production leads to these prices? I appreciate quality and they certainly have that and it is a small market but I didn't think this alone answered the question. I think tbone answered it very well. Another mystery solved

 

[cool_hardware52]

Perhaps you dislike the wording but it is a legitimate question. When I first started looking at cave courses and saw the price of canister lights I asked myself the same question. What aspect of the design and production leads to these prices? I appreciate quality and they certainly have that and it is a small market but I didn't think this alone answered the question. I think tbone answered it very well. Another mystery solved

"Why do can lights cost $XX" is legitimate question.

Claiming the price of can lights is ridiculous and producers must enjoy huge (profit) margins, when you know nothing of the realities of the business is uncalled for.

The first deserves an answer, the second is without merit.

I'll point out that while tbone provided a answer with greater detail, the basics, i.e. volume, were covered by CaveEagle and myself in posts #2, and #3.

Just as nature abhors a vacuum, free enterprise won't let "huge margins" exist without competition for very long. Unlike government protected monopolies, when there is competition, which the OP acknowledged, margins will never be "huge". Somebody else will jump in for a piece of that pie.

Tobin