Why are primary lights so expensive?

[OMANDIVER]

I'm not pretending anything - here is what I posted and I stand by it - 'Suddenly struck by the fact that a reasonable one costs the same as a Macbook Pro. How can that be? It's just ridiculous." Think of the technology in a laptop and the think of a dive light; it's a torch for heaven's sake. I am not accusing light manufacturers of ripping off customers, I am thinking WOW that's weird. Don't think I'm the only diver who thinks this because I'm not. If people can make a living making and selling lights, that's great. The small number of units sold means that the gross operating margins must be high, in excess of 20% say in order to make a living if making and selling lights is what you do. But please don't give me a load of ******** about insulting manufacturers, as customers or 'the market' have as much right to call them on pricing as they do on anything else. If this is too robust for you, go back to flower arranging.

 

[kelemvor]

Great thread! Thanks for sharing, Bobby. I've often wondered about the issue myself and now we've got some ballpark figures to explain the cost. That is a rare thing to see shared by any manufacturer.

Given the markups seen on other dive gear, I had assumed there were massive profits with lights as well. Obviously not, at least not for UWLD lights.

 

[runsongas]

I buy a quite a few of 18650's As chance would have it I just issued a PO for 600 pieces. I've sourced well over 2 million rechargeable cells in the last 20 years. I'm still baffled how a "gigafactory" is going to cut the costs of 18650's by any meaningful amount. Battery manufacturing currently is highly automated, and most concentrated in low wage areas. Regardless of where the assembly plant is located you still need nickle for cases, and lithium and electrolyte, sealing components, heat shrink etc. The input materials don't magically get cheaper in Reno vs Korea. Will a US based "giga factory" be able to offset higher costs of domestic wages with even greater automation? Maybe, but without game changing technology in the actual cell I just don't see Lithium Ion cells getting a great deal cheaper.

Tobin

They probably are going to IMR cells. With IMR cells, you have cheaper electrolyte, can skip the protection circuit on each individual cell, and go to a cheaper casing as the cells are a lower hazard rating.

 

[cool_hardware52]

I'm not pretending anything - here is what I posted and I stand by it - 'Suddenly struck by the fact that a reasonable one costs the same as a Macbook Pro. How can that be? It's just ridiculous." Think of the technology in a laptop and the think of a dive light; it's a torch for heaven's sake. I am not accusing light manufacturers of ripping off customers, I am thinking WOW that's weird. Don't think I'm the only diver who thinks this because I'm not. If people can make a living making and selling lights, that's great. The small number of units sold means that the gross operating margins must be high, in excess of 20% say in order to make a living if making and selling lights is what you do. But please don't give me a load of ******** about insulting manufacturers, as customers or 'the market' have as much right to call them on pricing as they do on anything else. If this is too robust for you, go back to flower arranging.

Ya I was struck by the ridiculous cost of a Supercar, I mean after all they have 4 tires and an engine just like a Toyota Corolla. Wow the margins on those must be Huuuuge.

Tobin

 

[cool_hardware52]

They probably are going to IMR cells. With IMR cells, you have cheaper electrolyte, can skip the protection circuit on each individual cell, and go to a cheaper casing as the cells are a lower hazard rating.

The vast, vast majority of cells produced today have no internal protection circuit.

The nickle "can" that contains the cell offers no protection regardless of the chemistry.

If IMR cells are actually the answer why aren't these being produced in low wage countries right now?

I suspect it is the low cycle life.

My guess is the "Gigafactory" was a good way to take the taxpayers in Nevada for a ride......

Tobin

 

[KeithG]

I'm not pretending anything - here is what I posted and I stand by it - 'Suddenly struck by the fact that a reasonable one costs the same as a Macbook Pro. How can that be? It's just ridiculous." Think of the technology in a laptop and the think of a dive light; it's a torch for heaven's sake. I am not accusing light manufacturers of ripping off customers, I am thinking WOW that's weird. Don't think I'm the only diver who thinks this because I'm not. If people can make a living making and selling lights, that's great. The small number of units sold means that the gross operating margins must be high, in excess of 20% say in order to make a living if making and selling lights is what you do. But please don't give me a load of ******** about insulting manufacturers, as customers or 'the market' have as much right to call them on pricing as they do on anything else. If this is too robust for you, go back to flower arranging.

the prices become very reasonable when you consider design / engineering costs as opposed to just the end material costs. it is very easy to run up several 100's of thousands of dollars in design costs. if you end up selling 200 million iphones then the engineering cost becomes pennies per unit. if you only sell a thousand units then the engineering costs (and ongoing operational costs) dwarf the raw material costs.

in my past life i worked for a high tech startup that was placing computerized instrumentation systems on trucks. raw parts cost was about $800. price was over $20,000. the company never turned a profit due to the engineering costs to create the system. several million $ were burnt before the venture capital backers pulled the plug.

 

[flymolo]

I'm not pretending anything - here is what I posted and I stand by it - 'Suddenly struck by the fact that a reasonable one costs the same as a Macbook Pro. How can that be? It's just ridiculous." Think of the technology in a laptop and the think of a dive light; it's a torch for heaven's sake. I am not accusing light manufacturers of ripping off customers, I am thinking WOW that's weird. Don't think I'm the only diver who thinks this because I'm not. If people can make a living making and selling lights, that's great. The small number of units sold means that the gross operating margins must be high, in excess of 20% say in order to make a living if making and selling lights is what you do. But please don't give me a load of ******** about insulting manufacturers, as customers or 'the market' have as much right to call them on pricing as they do on anything else. If this is too robust for you, go back to flower arranging.

I think the point is, products created for technical diving aren't commoditized. It's also worth considering the value add in the excellent, personalized service these equipment manufacturers provide.

 

[tbone1004]

20% margin is anything but high, that's quite low for most industries, especially consumer goods. That is more normal in B2B type businesses, but 50% is closer to what you see in retail sporting goods

 

[runsongas]

The vast, vast majority of cells produced today have no internal protection circuit.

The nickle "can" that contains the cell offers no protection regardless of the chemistry.

If IMR cells are actually the answer why aren't these being produced in low wage countries right now?

I suspect it is the low cycle life.

My guess is the "Gigafactory" was a good way to take the taxpayers in Nevada for a ride......

Tobin

yes, the majority of cells sold are unprotected, but it only is a good idea with IMR/INR cells as unprotected ICR cells can cause fires or explode. the original tesla batteries were LiCo iirc due to density issues with LiFePo4 and 1st gen LiMnO batteries.

IMR/INR cells are starting to become popular. the LG HG2 is one of the newest versions that has great performance characteristics.

by the time the gigafactory gets built, we may see a newer electrolyte with lower cost and higher capacity anyways. I would say the cost savings quoted by Tesla as optimistic, but not impossible. The tax incentives given by Nevada is a different matter entirely.

 

[Eric Sedletzky]

If you want to see ridiculous prices look at outboard motors! I can buy a pretty nice car for what one costs.
Can lights are a bargain compared.