Path: utzoo!attcan!utgpu!jarvis.csri.toronto.edu!rutgers!apple!bbn!bbn.com!denbeste From: denbeste@bbn.com (Steven Den Beste) Newsgroups: comp.sys.amiga Subject: Re: Wish I had an Amiga 1500 Summary: Difference between fixed amortized costs and per-unit costs Message-ID: <42606@bbn.COM> Date: 12 Jul 89 13:45:24 GMT References: <20219@cup.portal.com> <12644@well.UUCP> Sender: news@bbn.COM Lines: 36 In article <12644@well.UUCP>, farren@well.UUCP (Mike Farren) writes: > In article <446@aucis.UUCP> easton@aucis.UUCP (Jeff Easton) writes: > > Cost reduction comes from smaller power supply (200 W -> 80 W), reduced > >number of connectors (4 AT, 2 zorro, 1 video), smaller PC board, less > >metal, additional glue logic put into a gate array. > > Cost increases come from overhead costs of redesigining the case, new > manufacturing facilities, additional costs of supporting a new model, > design and manufacture of "additional glue logic". You don't win. You > might not even break even. > > -- > Mike Farren farren@well.sf.ca.usa If GM spends $10,000 redesigning a car to eliminate 3 5-cent screws, GM makes money. Per-unit costs are a straight additive to the cost-of-sales. All the costs Mike Farren cites are one-time costs which are amortized over the total manufacturing life of the product. Since at least 500,000 A500's have been built, the amortized cost of these things (except the support) is almost neglible on a per-unit basis. (Probably less than a dollar.) But the cost savings of the smaller, less expensive supply, the easier, less expensive final assembly process DIRECTLY subtracts at least a hundred dollars, possibly more, from the cost-of-sales. You know, on Howdy-Doody (now I'm dating myself) Cowboy Bob would occasionally say "No comments from the peanut gallery" to the kibitzing little kids on the show. What makes you peanuts think you understand Commodore's business and market better than they do? If you're so smart, why don't you start a competing business? Think of all the money you could make by skimping on the amortized cost and increasing the per-unit costs?