RE: Why is this sooo expensive?...(Re: M-Lad business practices?)

["Dupree, Jim" <dupree@alldata.com>]

It has always been my understanding that a large portion of the cost of a
"Chip" is attributable to the cost of development. How much time and money
was spent developing timing, fuel and boost maps that give the performance
required and don't grenade the motor? The development cost has to be
recouped through the sales of the product. If you only sell 1 of your
product then all the development cost has to be added into the price (unless
you have a rich Aunt or something). The more of the product sold, the
smaller the portion of development cost that has to added in to each unit.
There is a relatively small market for Audi chips compared to VW's. So an
Audi chip will carry a larger development cost per chip than a VW chip
would. 
Of course there are many other factors that will be used to determine the
sale price of any product. These would probable include labor costs,
materials, market demand, marketing costs, etc...
I have seen products that had a packaged & delivered cost of 10% of the
retail price. This represented the need to recoup 10's of thousands of
dollars spent before there was even a single product to sell and the
required production runs of thousands of units to make production cost
feasible. Probable 2-3 years to sell of the first production run. Someone
has to stick their neck out (a long way some times) to develop and market
new products.
I certainly don't know what Scott or Ned or any of the others have invested
in development or what their business plan uses to determine sales price but
I do know a simple product can get very expensive to develop quickly. 
Many of us have tried new things that didn't work before and some times it
cost a lot of money. I had a muffler I modified with a bypass valve for a
911 Turbo that melted after 10 minutes on the dyno. The muffler had an
aluminum housing and we never thought about the heat that close to the
turbo. There was aluminum splattered all inside the dyno exhaust duct and
drips on the floor. The next version was stainless steel and works quit
well, opens up to a straight pipe at any rpm above 3000 as long as there is
boost pressure. It was a one off and is controlled by the MoTec system.
A few mapping errors for a 20v turbo chip could cost an engine, a big jump
in development cost all of a sudden.
Buy from reputable people and research _before_ you buy.
Just My 0.10 worth
Jim Dupree


		-----Original Message-----
		From:	The PC Handyman [mailto:pchandyman@intrex.net]
		Sent:	Monday, November 29, 1999 4:58 PM
		To:	quattro@audifans.com
		Subject:	Why is this sooo expensive?...(Re: M-Lad
business practices?)

		----- Original Message -----
		From: TM <mizutanit@mindspring.com>
		Subject: RE: Monkey Lad business practices? (Re:
Turbo/wastegate questions -
		K24, WG Spring etc.)


		> Let me preface this by saying that I don't know Scott nor
do I have
		> anything to do with him.
		>
		> That said, $375 is about market price for this mod. TAP
wants $400.
		> Hoppen no longer does this. Anderson Motorsports wants
$400. Intended
		> Acceleration wants $600, IIRC. (Why is IA so expensive?
Ned says his
		> product is markedly superior. Is it?) Garrett Lim of A4
and VW 1.8T
		> fame wants $350 to do this. It doesn't sound particular
expensive or
		> unfair.
		>
		> If someone really got the mod for $210, then that's
unusual, but to
		> me, $375 and "about $400" sounds like the same, especially
if you
		> consider shipping costs.
		>
		> I want to chip my soon-to-be-mine 5kcstq and am still
researching the
		> issue, as I am very intrigued at Ned Ritchie's pricing
scheme. Why
		> he wants 50% more than everyone else, I don't know. If his
chip is that
		> much better and everyone in the know eventually gets his
chip, then the
		> price is justified for a markedly superior product.
Otherwise, I'll
		> either go with Scott or Garrett, considering Scott is much
cheaper and
		> Garrett is local to me

		The reasonable prices that I had in mind but failed to
mention were also
		from Garrett (http://www.giacusa.com/welcome.html). They
sell chips for the
		VW motronic 16v for $130. Perhaps they are part of the
reason that I started
		this flame-attracting thread. Is the Motronic mod much
different than the
		MAC11 mod?


		-Noah