Thus the rule of 2.3x. You should price your product at at least 2.3 times its cost to allow for at least one 50% margin for you and another 50% margin for your retailer (1.5 x 1.5 = 2.25).
That first 50% margin for you is really mostly covering the hidden costs of doing business at scale that you hadn’t thought of when you first started, from the employees that you didn’t think you’d have to hire to the insurance you didn’t think you’d need to take out and the customer support and returns you never expected. And the 50% margin for the third-party retailers is just the way retail works.
(Actually most companies base their model on a 60% margin, which would lead to a 2.6x multiplier, but I’m applying a bit of a discount to capture that initial Maker altruism.)
So your $20 kit should have been priced at $46, not $25. It may feel steep to you now, but if you don’t get the price right at the start, you won’t be able to keep making them, and everyone loses. It’s the difference between a hobby and a real business.
Stop breadboarding and soldering – start making immediately! Adafruit’s Circuit Playground is jam-packed with LEDs, sensors, buttons, alligator clip pads and more. Build projects with Circuit Playground in a few minutes with the drag-and-drop MakeCode programming site, learn computer science using the CS Discoveries class on code.org, jump into CircuitPython to learn Python and hardware together, or even use Arduino IDE. Circuit Playground Express is the newest and best Circuit Playground board, with support for MakeCode, CircuitPython, and Arduino. It has a powerful processor, 10 NeoPixels, mini speaker, InfraRed receive and transmit, two buttons, a switch, 14 alligator clip pads, and lots of sensors: capacitive touch, IR proximity, temperature, light, motion and sound. A whole wide world of electronics and coding is waiting for you, and it fits in the palm of your hand.
Have an amazing project to share? The Electronics Show and Tell with Google Hangouts On-Air is every Wednesday at 7:30pm ET! To join, head over to YouTube and check out the show’s live chat – we’ll post the link there.
