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'[PIC]: Product pricing'
2003\04\15@010735 by Jinx

face picon face
Now, this may seem like a silly question with an obvious answer,
and a fortunate position to be in, but it's left me very undecided

I'm trying to put a price on a product that's ready for small-medium
manufacture. It's based around a fairly simple F628 program that
took around 20 (productive) hours to write and about NZ$47 worth
of components. Hand assembly takes 4-5 hours

The opposition product, which does exactly the same job, costs
NZ$1350. I've never physically examined this product to copy it, I
was told what it does and just did it my way, actually improving it.
Apparently the opposition product does sell quite well, and as far
as I know, my version is the only other competitor

Spread over a first run of 12 units, even charging $100/hr for s/w
and $30/hr for assembly, this comes to about NZ$334/unit, which
is over $1000/unit less than the other product

There's very little in the way of further costs - no packaging, no
distribution, no advertising

My feeling, because I'm a nice guy, is that NZ$334 is a fair price,
and in future it would be even fairer because I've recouped the
s/w development cost. Yet I can't help also feeling that $1000 is
a big gap between me and the opposition and I should be trying
to narrow that down by several hundred dollars

Does anyone have advice ? Normally I don't have this problem
because the differential is nowhere near as great

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2003\04\15@012622 by Alex Kilpatrick

flavicon
face
I'm not a marketing guy, but I think there is a real danger in pricing
your product too much lower than the competition.  It will be perceived
as sub-quality, whether or not it is.  I would double your price, and
get some really slick packaging.  That will go a long way towards having
people accept your product.

Also, it may be that $1350 is reasonable for the competitor's product.
If they are a big company, then they may be able to charge more because
people are paying for the comfort/reliability/reputation that goes along
with dealing with a big company.  But big companies have big overhead,
which it sounds like you do not.

One thing I have learned as an engineer is that technical merit is a
relatively small part of the equation when it comes to sales.  It is all
about perception.  
Also, it has nothing to do with being a nice guy.  This is business.  If
you want to be a nice guy, publish the schematics and software as open
source.  Or another way to look at it -- charge what the market will
bear.  Maybe 80% of their price?  And then take your "obscene profit"
and roll it into your business so you can expand your capabilities and
make better things.  Wouldn't a sophisticated logic analyzer help your
designs?  :-)

Good luck!  I love capitalism.  In my business (not PICs), I would love
to have a competitor like you.  I am tired of always coming up with the
new ideas.

Alex

> {Original Message removed}

2003\04\15@032838 by Russell McMahon

face
flavicon
face
> Now, this may seem like a silly question with an obvious answer,
> and a fortunate position to be in, but it's left me very undecided
>
> I'm trying to put a price on a product that's ready for small-medium
> manufacture. It's based around a fairly simple F628 program that
> took around 20 (productive) hours to write and about NZ$47 worth
> of components. Hand assembly takes 4-5 hours

etc

Your friendly local PC fixit man will charge $60/hr if you are very very
lucky and 80-100/hr if possible.
Electronic repair firms charge $80 - $120 /hr for repairs which to them are
often trivially easy. The cheapest lawyer you can find will cost around
$130 - $150/hr.

If you want to build up some "capital bow wave" so that you can buy the test
and development equipment that you would like (or need) and some limited
production equipment to make assembly jobs better and quicker, then
amotising some of this into your products seems to be no sin IF the market
will bear it. In this case the market apparently will. odds are the other
people are ripping people off. I'd suggest a price to start about half way
between your reasonable price and their selling price. You can always go
down later. Going up is often harder.

Let me see your new scope when you buy it :-). Tek is doing 12% off tradeins
until end of May

Tere is also the chance that you will be "left holding the baby" unless you
have a firm order paid in advance for your product. If not on this job then
on the next one. Funding a dgree of unpaid for R&D will also help you and
your customers long term.


       Russell McMahon

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2003\04\15@032852 by Dave King

flavicon
face
>Spread over a first run of 12 units, even charging $100/hr for s/w
>and $30/hr for assembly, this comes to about NZ$334/unit, which
>is over $1000/unit less than the other product
>
>There's very little in the way of further costs - no packaging, no
>distribution, no advertising
>
>My feeling, because I'm a nice guy, is that NZ$334 is a fair price,
>and in future it would be even fairer because I've recouped the
>s/w development cost. Yet I can't help also feeling that $1000 is
>a big gap between me and the opposition and I should be trying
>to narrow that down by several hundred dollars
>
>Does anyone have advice ? Normally I don't have this problem
>because the differential is nowhere near as great

Price yourself competitively ie don't be too nice a guy. It's a lot
easier to tack on a hundred extra or drop a hundred from the $800
mark than it is to good from $334 up to $800....

Don't forget your $334 is your cost not your profit. Ie if you had paid
yourself for each job you listed (and a few you didn't) then $334 is
what it would cost you to produce that product. If you wind up selling
1000 over a year who is going to build all of them etc?

Dave

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2003\04\15@032900 by Sean Alcorn - PIC Stuff

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face
Well said Alex.

Sean

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2003\04\15@033044 by M. Adam Davis

flavicon
face
It sounds like you are not taking into account problems you /will/ find
along the way.  As well as you may have designed your product, and as
easy as it is to test, it's possible for the first batch to come out
with 40-60% failure rate.  Or you may find that odd environments cause
it to fail sporadically in the field.

Were I you, and I had a strong market position (ie, are they easy to
sell?), I'd go just low enough below the competitor's price to make
people think that the extra cost is too much to pay for something
they've been using in the past that works well for them.

Once the competitor notices you they will lower their cost and try to
undercut you.  It should be fairly easy to go lower yet again, and if
volume really picks up you can automate assembly and make them even cheaper.

Until you get a really solid idea of how hundreds of your devices
perform in the field, and how easy they are to manufacture/test and get
low failure rates, play it safe.  You can always lower your price
later.  Customers who see you start with a low price then go up may take
that as a bad sign.

-Adam

Jinx wrote:

{Quote hidden}

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2003\04\15@045112 by Alan B. Pearce

face picon face
>My feeling, because I'm a nice guy, is that NZ$334 is a fair
>price, and in future it would be even fairer because I've
>recouped the s/w development cost. Yet I can't help also
>feeling that $1000 is a big gap between me and the opposition
>and I should be trying to narrow that down by several
>hundred dollars

Sounds to me like you have a $499.99 product :)

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2003\04\15@045121 by Alan B. Pearce

face picon face
>Let me see your new scope when you buy it :-). Tek is
>doing 12% off tradeins until end of May

Talking of that, was it not you asking for comparisons recently? what
decision did you make?

And I now revise my $499.99 to $999.99 with some of the extra $500 going on
super slick packaging, having read some more posts on the thread.

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2003\04\15@061242 by William Chops Westfield

face picon face
> I'm trying to put a price on a product that's ready for small-medium
> manufacture. It's based around a fairly simple F628 program that
> took around 20 (productive) hours to write and about NZ$47 worth
> of components. Hand assembly takes 4-5 hours
> [I can sell it for ~$350, but the nearest competitor charges $1400]

You have what is known as 'flexibility', available to you because of what
you hope to be a large margin between your manufacturing costs and the price
that the market will bear.  Set your price low, and you can raise prices if
you manage to collect customers at a furious rate.  Price it high, and you
can lower prices if you DON'T collect as many customers as you'd like.
Personally, I'd start at around $1000, I think.  As people said, there are
costs you're not really considering, like perhaps the cost of hiring
additional manufacturing capability if lots of people decide they want the
product.  This is a traditional pit-fall for startups, I understand.  They
have swell cash flow, but not enough to speed up the buy/manufacture cycle
to grows the business.  It happened to us.  And venture capitalists get rich
off of that sort of "mistake"...

BillW

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2003\04\15@061619 by Russell McMahon

face
flavicon
face
>> Tek is
> >doing 12% off tradeins until end of May

Still dithering - Bottom end Tek or substantially dearer HP.
(Who said HP is dead ? :-) )
HP has triggering on all sorts of nice things (CAN, IIC, RS232, ..), has
inbuilt serial interface (Tek is extra), 4MB sample buffer versus Tek's 32
kB which makes it far far far better at picking out glitches in a long
duration signal. And far far more. And much more $$$. And external trigger
output so you can chain your old scope to it and make it a 4 beam and .....
:-)


And ....




Russell McMahon

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2003\04\15@064230 by Jinx

face picon face
> And I now revise my $499.99 to $999.99 with some of the extra
> $500 going on super slick packaging, having read some more
> posts on the thread

The only packaging this thing needs is to be on a card in a blister
pack, which sounds a little strange considering the price. You won't
find it on the shelf at Woolworths next to the Pick 'n' Mix. It's more
like an auto spare, bought by some guy with dirty nails and no neck
who's got it out of the pack before he's left the store

Thank you all very much for on- and off-list comments. Y'know, after
all the times you think you get paid too little, when the chance comes
along to make good, you don't expect a fight with yourself

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2003\04\15@074742 by Brent Brown

picon face
Jinx,

Always a hard one to decide, conscience always gets in the way. Often
I do the numbers different ways till I consistently get the same
answer, and so convince myself it must be about right. I never did
any marketing courses, but some ideas I (try to) use...

- Add up the parts and labour costs, estimated hidden costs
(incidentals like couriers, solder, glue, tools, etc), add 10% to
cover price fluctuations and parts availability hassles. Consider
this total your bottom line "cost". For small runs sell price is cost
+ 100%. Make some volume price break points, down to say no less than
30% profit at maximum quantity.

- Dont accept projected volume figures (especially with new clients).

- Don't sell yourself short on $30/hr for assembly if you are the one
doing it. You are the developer. It's better for you to spend that
time developing another new product and get $60/hr (or whatever). You
will soon get bored making units by hand when subconsciously tell
yourself you are working for half price.

- Consider the value of the product to the customer when deciding the
price.

- Consider what level of support you will be required to give to this
product and how enthusiastic you will be to do repairs, upgrades,
answer dumb questions, etc.

- Dont be afraid to sell the first batch at a high price to recover
your development costs as fast as possible (when the market can
obviously accept it). Then drop back to your "fair" price.

--
Brent Brown, Electronic Design Solutions
16 English Street, Hamilton, New Zealand
Ph/fax: +64 7 849 0069
Mobile/txt: 025 334 069
eMail:  RemoveMEbrent.brownspamTakeThisOuTclear.net.nz

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2003\04\15@074754 by

flavicon
face
Hm, you might always share, let's say, 10% of
your margin with the list, if that would make
you feel better :-)

And whenever this product goes "live", do tell
us what it is !

Jan-Erik.

Jinx wrote:
> Y'know, after all the times you think you get paid too little,
> when the chance comes along to make good, you don't expect a
> fight with yourself

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2003\04\15@074939 by Sean Alcorn - PIC Stuff

flavicon
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--Apple-Mail-2--915969722
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On Tuesday, Apr 15, 2003, at 20:29 Australia/Sydney, Jinx wrote:

> It's more
> like an auto spare, bought by some guy with dirty nails and no neck
> who's got it out of the pack before he's left the store

Hey Joe, it's not that Auto Security System we were discussing a few
months back, is it? :-)

Sean

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--Apple-Mail-2--915969722
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On Tuesday, Apr 15, 2003, at 20:29 Australia/Sydney, Jinx wrote:


<excerpt><fixed>It's more

like an auto spare, bought by some guy with dirty nails and no neck

who's got it out of the pack before he's left the store

</fixed></excerpt><fixed>

Hey Joe, it's not that Auto Security System we were discussing a few
months back, is it? :-)


Sean</fixed>


--Apple-Mail-2--915969722--

2003\04\15@075037 by fred jones

picon face
Hi Jinx,
Another thing to think about is that its quite possible that your
competition has already payed back their R&D costs and has a much lower cost
to manufacture than what they are selling it for.  When your competition
becomes aware of you cutting into their profits, they may decide to lower
the price of their product as well.  Start your price higher so that you and
your comptetitor have "room" to stabilize on a price.  If you start too low,
they may be able to come down to a non-profitable level for you but be
profitable themselves.
Good luck,
FJ






{Quote hidden}

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2003\04\15@084045 by Dale Botkin

flavicon
face
On Tue, 15 Apr 2003, Jinx wrote:

> The opposition product, which does exactly the same job, costs
> NZ$1350. I've never physically examined this product to copy it, I
> was told what it does and just did it my way, actually improving it.
> Apparently the opposition product does sell quite well, and as far
> as I know, my version is the only other competitor

I did one a year and a half or so back...  there *was* no competing
product, ours was the first.  I did the hardware & firmware for another
guy, who did the marketing and sales.  Since having it work properly one
time would save the customer about $35K, he was selling them like mad for
$1300+ each.  Cost to manufacture was well under $200.  Seller was very
happy indeed, and so were the customers...  even at what appears to be a
very high profit, they were getting a great deal.

Unfortunately *I* never got paid for it, but that's a different story.  I
recommend against taking on jobs for a percentage, by the way.

Dale
--
It's a thankless job, but I've got a lot of Karma to burn off.

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2003\04\15@084050 by Hugo Harming

flavicon
I have a feeling it's a car diagnostic tool (OBD or wassitsname)... no?

/Hugo



-----Original Message-----
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Sent: Tuesday, April 15, 2003 1:51 PM
To: @spam@PICLIST@spam@spamspam_OUTMITVMA.MIT.EDU
Subject: Re: [PIC]: Product pricing


On Tuesday, Apr 15, 2003, at 20:29 Australia/Sydney, Jinx wrote:

> It's more
> like an auto spare, bought by some guy with dirty nails and no neck
> who's got it out of the pack before he's left the store

Hey Joe, it's not that Auto Security System we were discussing a few
months back, is it? :-)

Sean

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2003\04\15@094003 by Jinx

face picon face
> When your competition becomes aware of you cutting into their
> profits, they may decide to lower the price of their product as well.
> Start your price higher so that you and your comptetitor have "room"
> to stabilize on a price.  If you start too low, they may be able to come
> down to a non-profitable level for you but be profitable themselves

It's a niche but not small market, and AFAIK they are the only product
serving that market and possibly they've been taking advantage of
their position. The person who asked me to make a version obviously
thinks that they are over-priced, and judging by what I know about their
product now I'd tend to agree, and that's with due regard to other costs
they may have incurred along the way. I've found a couple of other
niche items on the web that are horrendously over-priced yet easy to
make, and make better, than those available, but the customer base
would be quite small. It's actually quite interesting to study the dynamics
and relationships between customers and competing producers in
different sized markets

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2003\04\15@094028 by John Ferrell

face picon face
Marketing is a field in its self!

To us tech types it usually seems practical to price our products so that we
are fairly compensated for our efforts.
That sometimes works but is rarely the best metod for pricing.

The resources you put into your project are sunk costs. They are not
relevant to future decisions.
A more appropriate pricing strategy is to try to estimate how many of your
product at what price will be best for you.
At some point, the market is satisfied and no further product can be sold at
any price. If you price too high,
you will not sell many units. If you price too low the market will be
satisfied before you get your share of the compensation.

Also, it is just a matter of time before someone else is able to produce the
product more efficiently than you. Your
time on top is limited.
Good luck!

{Original Message removed}

2003\04\15@094100 by Alan B. Pearce

face picon face
>I have a feeling it's a car diagnostic tool (OBD or wassitsname)... no?

Oh you mean for clocking the odometer - i mean fixing it after it got
glitched :)))

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2003\04\15@094257 by Jinx

face picon face
> I have a feeling it's a car diagnostic tool (OBD or wassitsname)... no?

> /Hugo

Yes, that's right - "no" ;-)

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2003\04\15@094304 by Olin Lathrop

face picon face
> I'm trying to put a price on a product that's ready for small-medium
> manufacture. It's based around a fairly simple F628 program that
> took around 20 (productive) hours to write and about NZ$47 worth
> of components. Hand assembly takes 4-5 hours
>
> The opposition product, which does exactly the same job, costs
> NZ$1350. I've never physically examined this product to copy it, I
> was told what it does and just did it my way, actually improving it.
> Apparently the opposition product does sell quite well, and as far
> as I know, my version is the only other competitor
>
> Spread over a first run of 12 units, even charging $100/hr for s/w
> and $30/hr for assembly, this comes to about NZ$334/unit, which
> is over $1000/unit less than the other product
>
> There's very little in the way of further costs - no packaging, no
> distribution, no advertising
>
> My feeling, because I'm a nice guy, is that NZ$334 is a fair price,

No, that's stupid, not nice.  $334 is your *cost*, although I suspect your
real cost is higher because I bet there are things you didn't consider.
What about the cost of sales, support, field failures, DOAs, plus the
unexpected things you have no way of knowing what they are?

You don't have a salesman, people will just call you directly to buy it?
You still have sales cost.  Nobody is going to call up and say "Send me
one here's my money and address by".  They are going to ask questions want
demos, require invoices for their accounting department, etc, etc, etc, ad
infinitum.  Then who's going to install it, answer the dumb questions,
spend half a day on the phone with a customer that bungled an installation
and keeps insisting your unit it dead?

In the end though, your cost has nothing to do with your price except tell
you whether the whole venture is profitable or not.  The price only has to
do with what customers are willing to pay, which has nothing to do with
what it takes you to produce it.  It sounds like you've found a great
niche where customers are probably willing to pay a lot more than your
cost.  Great, go for it.  I would price it about $950.  That's 30% below
the competitors price, which feels about right.  It's also just below the
psychological $1000 threshold.

Remember, not everyone is suddenly going to buy your product just because
it's 30% cheaper, even if it does everything the existing product does.
There will be a ligitimate worry about support and quality from an
unproven source.  A lower price would only reinforce those fears.

First you need to capture significant market share from the competition.
Then you can evaluate the price elasticity.  In other words, how much
bigger would the market be at a lower price?  If you could sell a lot more
at a lower price, then come out with a "lite" version in 6 months for
$550, even if it's just the same product with a new label and package.  If
you think that further price reductions could lead to significantly more
sales, then you can look into serious cost reduction and volume
manufacture with a much lower price target.  But you don't do that until
the first price drop proves the price elasticity.


*****************************************************************
Embed Inc, embedded system specialists in Littleton Massachusetts
(978) 742-9014, http://www.embedinc.com

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2003\04\15@094308 by Alex Kilpatrick

flavicon
face
>
> I did one a year and a half or so back...  there *was* no
> competing product, ours was the first.  I did the hardware &
> firmware for another guy, who did the marketing and sales.  
> Since having it work properly one time would save the
> customer about $35K, he was selling them like mad for $1300+
> each.  Cost to manufacture was well under $200.  Seller was
> very happy indeed, and so were the customers...  even at what
> appears to be a very high profit, they were getting a great deal.
>
If your description is correct, it sounds like you priced it too low.  I
don't think most buyers have any clue about what profit margins
companies have.  I have a friend in manufacturing, and he said most
people overestimate by an order of magnitude how much something costs to
make (this is mass production).

But, from the buyer's point of view, the seller's profit is (and should
be) completely irrelevant.  All that matters is whether the product is
the the best one at the best price.  I hate the term "obscene profits,"
because it presupposes that someone else (consumer, government, etc.) is
a better judge of what profits should be in *my* business that I am.  If
my profits are that "obscene," then someone else will come in and
undercut me.  If no one can, then my profits aren't so obscene after
all.

I *want* to live in a world where a Bill Gates can be worth 40 billion.
That's a world with ample opportunity for everyone.

Alex

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2003\04\15@111839 by Dale Botkin

flavicon
face
On Tue, 15 Apr 2003, Alex Kilpatrick wrote:

> > I did one a year and a half or so back...  there *was* no
> > competing product, ours was the first.  I did the hardware &
> > firmware for another guy, who did the marketing and sales.
> > Since having it work properly one time would save the
> > customer about $35K, he was selling them like mad for $1300+
> > each.  Cost to manufacture was well under $200.  Seller was
> > very happy indeed, and so were the customers...  even at what
> > appears to be a very high profit, they were getting a great deal.
> >
>
> If your description is correct, it sounds like you priced it too low.

I didn't price it, but if I had I'd have probably gone a lot lower.
Dunno, though, maybe not - it's a pretty limited audience.  How many
people in your neighborhood drive 300+ ton trucks?  8-)

> I have a friend in manufacturing, and he said most people overestimate
> by an order of magnitude how much something costs to make (this is
> mass production).

And most engineers, I think, underestimate the amount of overhead and
expenses by as much.  Advertising, packaging, shipping, credit card
processing fees, overnight shipping for emergency parts orders, taxes,
paper and toner or print shop fees for manuals, web site costs, shipping
labels, the list goes on and on.

Dale
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2003\04\15@130954 by Tal

flavicon
face
Hi Jinx,

Since you are a nice guy, why not to charge NZ$3000 and share the
profits with us ?

On the serious side, unless you sell to close friends, family or your
product goal is to help needy people, just make sure the product does
well what it claims to do and price it to maximize your profit.

Now, this does not mean necessary the higher possible price, sometimes
you lower prices are well compensated with higher volumes, but make sure
you are doing your math right. As somebody mentioned earlier, it is very
easy to ignore hidden costs and in most cases, your actual cost will be
higher than expected.

Tal




> {Original Message removed}

2003\04\15@181717 by Philip Pemberton

face picon face
In message <013801c30330$558503c0$7b01a8c0@Paradise>
         Russell McMahon <apptechEraseMEspamPARADISE.NET.NZ> wrote:

> >> Tek is
> > >doing 12% off tradeins until end of May
>
> Still dithering - Bottom end Tek or substantially dearer HP.
> (Who said HP is dead ? :-) )
I've got a Tek 466. Who needs a DSO, anyway? <g>.

> HP has triggering on all sorts of nice things (CAN, IIC, RS232, ..), has
> inbuilt serial interface (Tek is extra), 4MB sample buffer versus Tek's 32
> kB which makes it far far far better at picking out glitches in a long
> duration signal. And far far more. And much more $$$. And external trigger
> output so you can chain your old scope to it and make it a 4 beam and .....
> :-)
You're a richer man than me if you can even think of looking at that high-end
a scope...
BTW, HP is dead IMO. They make printers. Agilent (formerly HP's
test/measurement wing) make some nice semiconductors and test instruments.
Just FYI...

Later.
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2003\04\15@181725 by Philip Pemberton

face picon face
In message <EraseMEF137N45e6OIVvXBpA9p00022cbespam@spam@hotmail.com>>          fred jones <@spam@boattowspam_OUTspam.....HOTMAIL.COM> wrote:
> to manufacture than what they are selling it for.  When your competition
> becomes aware of you cutting into their profits, they may decide to lower
> the price of their product as well.  Start your price higher so that you and
> your comptetitor have "room" to stabilize on a price.  If you start too low,
> they may be able to come down to a non-profitable level for you but be
> profitable themselves.
This sounds a lot like a bidding war in an auction... Only without the, er...
sniping...

Dum dum duuuum...

Later.
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2003\04\15@214918 by Mike Singer

picon face
Hi Jinx.
I've just found some wallpapers:

http://www.mcnews.com.au/NewBikeCatalogue/2002/HD/Touring/Default.htm


Priced very competently in my opinion.

Mike :-)

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2003\04\16@044318 by Mike Singer

picon face
Dale Botkin wrote:
>... he was selling them like mad for $1300+ each. Cost to
> manufacture was well under $200.  Seller was very happy
> indeed, and so were the customers... even at what appears
> to be a very high profit, they were getting a great deal.
>
> Unfortunately *I* never got paid for it, but that's a
> different story. I recommend against taking on jobs for a
> percentage, by the way.

What would you recommend?
Maybe it would be better to program each device at a home
for some fee? How one could protect his IP in small market
conditions?

Thank you.
Mike.
-----------------------------------
PS: Sorry if this question has been beaten to death.

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2003\04\16@060854 by Alan B. Pearce

face picon face
Dale Botkin wrote:
>... he was selling them like mad for $1300+ each. Cost to
> manufacture was well under $200.  Seller was very happy
> indeed, and so were the customers... even at what appears
> to be a very high profit, they were getting a great deal.
>
> Unfortunately *I* never got paid for it, but that's a
> different story. I recommend against taking on jobs for a
> percentage, by the way.

I assume that this is the job that caused a thread some time back now along
the lines of how to get a customer to pay up. Perhaps the time has come to
get a lawyer involved and threaten to sue for a royalty per unit built.

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2003\04\16@114101 by Chris Loiacono

flavicon
face
Sorry I'm so late - was out of town...
First, the clues of impending danger:

> Now, this may seem like a silly question with an obvious answer,
> and a fortunate position to be in,.....

and...

> There's very little in the way of further costs - no packaging, no
> distribution, no advertising....

It can almost be guaranteed that there will be *considerable* unanticipated
costs. Even if you have captured the basics at $337 or so, the real number
is at least $700. Need more infor for sure...

So there's no need to support the product in the hands of the end user, nor
the reseller.....Hmmm




A brief list of things to consider/add into pricing if a product becomes
successful:

1. Forget about 'doing it yourself' and use the cost of hired labor, fully
burdened with all the legally required expenses plus some head room. The
worst thing that can happen is that you sell too many and can't do them
yourself in the available time & with the available tools. The cost of
living up to order obligations with hired labor has put many out of
business.

2. Forget about trying to cost out your development hours if you are to sell
more than a handful. It's not worth the effort, and you WILL find that there
is more to develop after you start selling product anyway.

3. Use 2 to 3X your parts costs for starters and build on this minimum
number. Use the highest cost alternative parts in small order quantities
with overnight freight charges included. Count on some parts attrition, say
5% for loss or damage (some won't work as received)

4. Add to that the cost of handling a 30 minute phone call from every end
user that can find your number. Even if they don't call with complaints,
this is a case where you should be a nice guy and build a good market
presence while providing lots of 'feel good' support. Figure $50/hr for
this.

5. Figure that some of your tools will break, wear out or become obsolete in
the process of filling orders. While you can't exactly predict what it will
cost to keep your assembly operation running when all those orders are being
processed, a good rule of thumb is to count on replacing every minor & major
tool or piece of equipment per year and pro-rating this cost in with the
expected quantity. Things do break, and there is never a convenient time for
this to happen.
If some things outlast the year, good for you - you'll get closer to your
goal.

6. Like you, my conscience does not let me price things highly simply
because that's what the market will bear either. However, pricing a
non-commodity product based soley on expected cost doesn't often work out.
There's some kind of natural balancing phenom at work in this. I believe
that at times when someone thinks he's getting $1300 for a $300 product and
is making a super profit along the way, a careful analysis will often reveal
that he's making somewhere between 15 & 40% in the end.
Designing and building a product is probably 20% of the real cost in today's
world. It is truly unfortunate that one has to re-invest what he thinks are
profits into products liability insurance premiums, continual product design
improvement, customer support, sales and marketing support and the myriad of
other general & administrative costs. In a small home based business some of
the overhead may not be there, but all the things that are needed to get up
to speed are. Then to maintain this level there is considerable expense that
must be supported by ongoing marketing. All of these are expenses that
continually grow even when not expanding, hence the term "grow or die".

7. You need to know how many to build. A good way to base this (since you
don't have millions for a market survey) is to sell it first, obtaining
reseller's commitments along the way. Once you have agreements in hand that
tell how many will be ordered you'll have an idea of how much you'll be (or
someone else will be) comfortable investing to get started buying parts,
etc.

If the resellers then don't order as many/as often as they agreed, you will
have to market & sell in order to get them to perform as agreed. You may get
to skip this in the first go-round because a new product will often sell a
big spurt simply because it's new. But later on you'll have all those parts
and tools and insurances and etc and etc..that they will have to sell to
'cover the nut'.

The common alternative is to release an even newer or upgraded product
around the time the original is starting to go stale. It will - they all
do.) In today's economy, the idea is to market the old product again while
launching the new.
get it? There's a cycle here that has to be fed. No food, no life.

You can beat it by stretching it for a while by working like a dog and
losing sleep & hair (if any is left to begin) & friends & family, but
eventually it's still no food, no life.

The only product in the history of humankind that exists outside of these
guidelines is the universal solvent: H2O.


I always say there are no shortcuts. Do it right, or don't do it at all. Of
all the so called success stories of the little guy succeeding, 99% of them
will have done so because some mega marketing conglomerate stepped in and
did all the homework and executed according to a time-proven plan.

If I wasn't wasting everyones bandwidth, I'd tell this week's story about
the guy who spent hundreds of thousands of $$ to develop a product in the
past year or two - paying out to experts and contractors who were glad to
take his money while contributing completely useless effort. He never took
the time to learn what ALL the required real world expenses, efforts, time
and tasks would be ahead of time. All he did was to add up the prices on a
target price list and believe other peoples uneducated and inexperienced
commitments. It's great to see the lights come on when someone is shown the
true path to completion of a consumer product. The costs are always many
times what is expected by the inventor. Every now & then one turns up that
is really worth doing.

OK, done for now...

c

>
>
but it's left me very undecided
{Quote hidden}

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2003\04\16@131034 by Dale Botkin

flavicon
face
On Wed, 16 Apr 2003, Mike Singer wrote:

> Dale Botkin wrote:
> > Unfortunately *I* never got paid for it, but that's a
> > different story. I recommend against taking on jobs for a
> > percentage, by the way.
>
> What would you recommend?
> Maybe it would be better to program each device at a home
> for some fee? How one could protect his IP in small market
> conditions?

Certainly selling preprogrammed devices is one way.  Not perfect, but
good; if the guy's got the know-how to have PIC code protection busted,
he's probably able to build it himself anyway.  In my case, I did the
whole hardware design, user interface, software, all of it.  Our agreement
was quite clear, he just didn't (maybe wasn't able to, for whatever
reason) live up to it.  I know he got paid, but I never did.  It's a few
thousand dollars, but unfortunately he's far enough away that it would
cost me far more to get a judgment against him, and even then I'd probably
never actually collect anything.

I just got a little too trusting of someone I'd been having good luck with
for a year or so, his situation changed and my money became his money.
Yeah, I'm not happy about it, but there's not much I can do now so I move
on.  I will never again make the same mistake, though.

Dale
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2003\04\16@131422 by Dale Botkin

flavicon
face
On Wed, 16 Apr 2003, Alan B. Pearce wrote:

> I assume that this is the job that caused a thread some time back now along
> the lines of how to get a customer to pay up. Perhaps the time has come to
> get a lawyer involved and threaten to sue for a royalty per unit built.

I don't think so, but I do remember contribbuting to that thread.  He's in
another state, and the amount is big for me but small in lawyer terms.  I
did consider a lawyer, but I strongly suspect it would be a waste of
everyone's time...  and of course I'd have to pay the lawyer up front,
costing me more than I've already lost in fees.  I chalk it up as a
tuition payment.  Of course one of these days I'll go knock on the guy's
door if I'm out his way and we'll discuss it.

Dale
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2003\04\16@144711 by Eric Bohlman

picon face
4/15/03 5:42:06 AM, Brent Brown <brent.brownspam_OUTspam@spam@CLEAR.NET.NZ> wrote:

>- Don't sell yourself short on $30/hr for assembly if you are the one
>doing it. You are the developer. It's better for you to spend that
>time developing another new product and get $60/hr (or whatever). You
>will soon get bored making units by hand when subconsciously tell
>yourself you are working for half price.

The technical term for considerations like this is "opportunity cost," something that's frequently
overlooked.  Overlooking it usually results in "penny wise, pound foolish" decisions, particularly
when the decision involves "build vs. buy" or "do it yourself vs. farming it out or hiring
someone."  If you ignore opportunity costs, "build" and "do it yourself" often look a lot more
attractive than they really are.  Scrimping on tools (whether your own or those that a company buys
for employees) is another classic illustration; time wasted fighting ones tools is time that could
have been spent doing something that creates value.

In particular, if you find yourself doing work that someone else could do cheaper, the difference is
an opportunity cost.

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2003\04\16@152855 by Olin Lathrop

face picon face
> There's very little in the way of further costs - no packaging, no
> distribution, no advertising....

This is somewhat of an aside, although it is PIC related in that the
product contains a PIC and may be of interest to the PIC community.

I've developed a product that I'd like to sell on my web site in an
automated way.  We've all seen "e-commerce" web sites, but I have no idea
how to set one up or find the information to set one up.  Ideally, I'd
like something that takes the shipping/billing address and credit card
info, validates the card, charges the card which eventually transfers
money to my bank account automatically or sends me a check once a month,
then sends email to a designated address so that the product can be
shipped.  I'd be happy to pay a commission for this service, say 10% of
the sell price.

I've looked at Pay Pal.  That might be OK for hobbyists, but I think it's
too much hassle for the customer.  I know I've just moved on whenever a
site required me to have a Pay Pal account.  Besides, my primary
motivation for this product is to blaze a trail thru the whole process
from concept to sales, so I want to learn how to do it the right way.

I've seen that Yahoo has something that lets you take credit cards, but it
appears to be similar to Pay Pal and the details are vague with no way to
ask questions.  There is also the Yahoo store.  It might even be something
I want, but again I had lots of questions after looking over their web
site with no way to ask them of a real human.  If it's that hard to become
a customer, imagine how hard it will be to get support later.

Surely a few of you have been down this path before?


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2003\04\16@154255 by Picdude

flavicon
face
Google for "merchant account", "online payment processing" or similar.  First you'll find links to how to setup your own merchant account and a custom website, but delving deeper, you'll find sites with host providers that provide a service similar to yahoo store.  IE:  shopping cart systems w/hosting and payment processing.

Cheers,
-Neil.



On Wednesday 16 April 2003 14:24, Olin Lathrop wrote:
{Quote hidden}

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2003\04\16@163106 by Olin Lathrop

face picon face
Picdude wrote:
> Google for "merchant account", "online payment processing" or similar.
> First you'll find links to how to setup your own merchant account and a
> custom website, but delving deeper, you'll find sites with host
> providers that provide a service similar to yahoo store.  IE:  shopping
> cart systems w/hosting and payment processing.

Are there any that you know of or could recommend?


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2003\04\16@163332 by Russell C. Hay

flavicon
face
Signio by Verisign works pretty well for online payment processing, but you
have to have your own merchant account and a shopping cart that can handle
it.

-R

{Original Message removed}

2003\04\16@164953 by Tom Messenger

flavicon
face
At 04:30 PM 4/16/03 -0400, you wrote:
>Are there any that you know of or could recommend?

PCMagazine ran some articles on just this topic recently.  They reviewed
seven of the leading players who supply most or all of what you are looking
for.

If you don't have the paper version, here's a link to one of the articles:


http://www.zdnet.com/anchordesk/story/story_2876.html

Tom M.

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2003\04\16@165401 by Olin Lathrop

face picon face
Pete Stapley wrote:
>       I have some experience with situations like this as I work as a
> web developer and quite often create sites for people who want to sell
> things online. The problem I see the most is someone who will not sell
> a lot of products but wants to set up a web site and have someone else
> to validate the card and charge the card and just send them a check.
> Well this is expensive and they don't realize how much this is going to
> cost and they end up validating and charging the cards themselves.

I'm still learning about this stuff and don't have a good idea what it
would cost.  It seems to me that once the site is set up, the cost should
be minimal because little or no human interaction is required.

> While I have not looked at all of the credit card processors that are
> available, I have seen a few and most charge an up front monthly fee no
> matter how much you sell then take a cut from each order. Do you have
> any idea how much business you expect to do each month?

No, since I'm just trying to get into this.  Initial volume would probably
be "low" by most people's standards, maybe just a few $100/month.  I don't
actually expect to make money initially, but I'd like a system set up so
that I understand the process and the cost to entry for additional
products is low.  I've got plenty of ideas for potential products, but the
web selling part has always been the barrier.

> Something else
> I see often is people who want these shopping carts cheap. Well my
> company does sell "canned" carts at a relatively low price,

Since I'm not familiar with this mechanism at all, I have no idea what
"low" means.

> the
> customer looks at them and they don't work exactly like they want and
> so they want modifications done and this costs more money.

I was (perhaps incorrectly) expecting there were HTML templates out there
that I could customize myself.  I don't mind writing HTML, it's the
shopping cart and credit card magic I have no idea about (but am willing
to learn).

> Everybody
> wants something a little different, if you are willing the accept how a
> canned cart works and looks then you should be able to set up a web
> site with relatively low cost.

Again, what does "low cost" mean.

> Most people I have dealt with are people
> who are not real familiar with the Internet and  want a full featured,
> fully customizable cart for a couple hundred bucks and this is just not
> possible.

Doh!

> The amount of programming and testing involved is just too
> much and the people around here at least are put off by the price.

It sounds like from what you are saying and what I've uncovered so far
that setting up a full merchant account, shopping cart, web credit card
validation and related infrastructure it out of reach for a small volume
seller.  I rather expected this, but also figured there would be
businesses out there that service exactly this niche.  One entity could
set up all that stuff once, then charge a percentage to let others sell
items thru them.  Incremental setup for an additional seller would be much
less, and carrying costs would be small because just about all work is per
sale.  It would seem to me (naively, very likely) that charging something
like $.50 per sale plus %10 of sale price would be profitable.  Perhaps
there are very good reasons this is not possible?


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2003\04\16@165735 by David Minkler

flavicon
face
Olin,

I purchased TextAloud MP3 from Nextup at http://www.nextup.com/ and they
use an order fulfilment process which looks a lot like what you are
looking for.  Maybe they can point you in the right direction.  Their
support has been great when I've needed it.

Best regards,

Dave

Olin Lathrop wrote:
{Quote hidden}

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2003\04\16@165956 by Dave Tweed

face
flavicon
face
Olin Lathrop <RemoveMEolin_piclistspam_OUTspamEMBEDINC.COM> wrote:
> I've developed a product that I'd like to sell on my web site in an
> automated way.  We've all seen "e-commerce" web sites, but I have no
> idea how to set one up or find the information to set one up.

Funny you should ask this now. I've been asked to look into this topic
for a potential web-services client of mine.

A quick Google leads to sites like
  http://www.paymentonline.com/
  http://www.charge.com/
and even
  http://www.wellsfargo.com/ (yes, that one)

All seem to have support for secure credit card transaction processing,
along with different levels of prepackaged "shopping cart" services,
depending on what you need.

Want me to look into this further for you?

-- Dave Tweed

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2003\04\16@170624 by Olin Lathrop

face picon face
Tom Messenger wrote:
> PCMagazine ran some articles on just this topic recently.  They reviewed
> seven of the leading players who supply most or all of what you are
> looking for.
>
> If you don't have the paper version, here's a link to one of the
> articles:
>
> http://www.zdnet.com/anchordesk/story/story_2876.html

Thanks, I'll check it out.


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2003\04\16@172028 by

flavicon
face
Olin Lathrop wrote:
> It would seem to me (naively, very likely) that charging something
> like $.50 per sale plus %10 of sale price would be profitable.  Perhaps
> there are very good reasons this is not possible?

Paypal charges $0.30 + 2.9% as a "Standard Rate".
When you get some volume the rate is
$0.30 + 2.2% ("Merchant Rate").

(There is an additional "cross boarder fee" of 1.0%
if you got non-US buyers.)

So, it's possible...

Jan-Erik.

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2003\04\16@174500 by Dale Botkin

flavicon
face
On Wed, 16 Apr 2003, Olin Lathrop wrote:

> It sounds like from what you are saying and what I've uncovered so far
> that setting up a full merchant account, shopping cart, web credit card
> validation and related infrastructure it out of reach for a small volume
> seller.

Hence the popularity of PayPal and eBay.

> I rather expected this, but also figured there would be
> businesses out there that service exactly this niche.  One entity could
> set up all that stuff once, then charge a percentage to let others sell
> items thru them.  Incremental setup for an additional seller would be much
> less, and carrying costs would be small because just about all work is per
> sale.  It would seem to me (naively, very likely) that charging something
> like $.50 per sale plus %10 of sale price would be profitable.  Perhaps
> there are very good reasons this is not possible?

I think things are changing, but for one thing if you get a merchant
account your merchant agreement will probably specifically prohibit you
from processing transactions for anyone else.  Also, think about this: If
I process credit card transactions for you, and you cheat the customers,
they will gete their money back from ME, not you, and I'm out the money.
Likewise if a customer decides to cheat you with a fradulent or stolen
card or whatever, I'm out the money - not you, unless you're nice enough
to reimburse me.  If you're in another state or if you are insolvent, too
bad for me.  So there's got to be a LOT of volume to make it worth me
putting up with all the fraud & theft losses.

I have seen many web hosting sites that will do the whole hosting,
shopping cart, etc AND get you set up with a merchant account for a few
hundred bucks startup plus $80-100 per month.  I haven't tried any, I just
use PayPal and have an order form the customer can print and mail with a
check or money order.  If I had a merchant account I'd let them FAX it to
me with their card information.

Dale
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2003\04\16@182428 by William Chops Westfield

face picon face
You might want to look at eBay "stores."  I don't know much about the
details, but it looks like a lot of people are using eBay in non-auction
ways as a sort of "first effort" at web-based retail...

I don't know about payment mechanisms, though.  As a buyer, I haven't had
any problems with paypal, but it does seem very "non-professionally
oriented."

BillW

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2003\04\16@183903 by Picdude

flavicon
face
The word appears to be getting out, about Paypal problems (you  can't dispute charges w/your CC company since Paypal did their service and THEY charged you).  So more and more, I find people not willing to purchase from a company if Paypal is the only option.

Yes, I also get the impression that people seeing Paypal for checkout tend to view the business as unprofessional and have doubts dealing over the web with a company that is run by a guy in his house.  Not saying that that's bad or good, but people tend to fear it.

Cheers,
-Neil



On Wednesday 16 April 2003 17:21, William Chops Westfield wrote:
> You might want to look at eBay "stores."  I don't know much about the
> details, but it looks like a lot of people are using eBay in non-auction
> ways as a sort of "first effort" at web-based retail...
>
> I don't know about payment mechanisms, though.  As a buyer, I haven't had
> any problems with paypal, but it does seem very "non-professionally
> oriented."
>
> BillW

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2003\04\16@190533 by Jinx

face picon face
> Yes, I also get the impression that people seeing Paypal for checkout
> tend to view the business as unprofessional and have doubts dealing
> over the web with a company that is run by a guy in his house.  Not
> saying that that's bad or good, but people tend to fear it.

> Cheers,
> -Neil

There's also this aspect

http://news.zdnet.co.uk/story/0,,t269-s2108146,00.html

The stories about credit card databases being ripped off seem
to have died down, auction fraud seems to be the new kid on the
block

================================================

I'm amazed, after all the publicity, that the Nigerian scam is still
claiming victims. It's so heavy-handed and clumsy I don't know how
anyone falls for it

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2003\04\16@190820 by Russell C. Hay

flavicon
face
Also, considering their recent legal issues (http://www.cnn.com/2003/TECH/biztech/04/01/ebay.paypal.reut/), I think paypals is not a very good way to go around collecting money.

-R

{Original Message removed}

2003\04\16@194340 by Neil Bradley

flavicon
face
> Also, considering their recent legal issues
> (http://www.cnn.com/2003/TECH/biztech/04/01/ebay.paypal.reut/), I think
> paypals is not a very good way to go around collecting money.

Unless you're in the gaming/gambling business, this is a no-op.

I've done over 120 transactions with Paypal as a seller, and more than 200
as a buyer. Not a single problem - ever, and I've used Paypal in my
embedded systems business for the past two years, and it NEVER has been a
problem. I also use it for my storefront business for phone and web
orders, also with no problems.

The vast majority of problems that people have with Paypal are person to
person transactions, and they are issues that arrive out of disputes.

For those considering it, give it a shot. If you don't use it, you aren't
charged. IF you don't like it, stop using it. Otherwise it's convenient,
expedient, and has never let me down.

-->Neil

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2003\04\16@205939 by Sergio Masci

picon face
----- Original Message -----
From: Olin Lathrop <KILLspamolin_piclistspamspamBeGoneEMBEDINC.COM>
To: <PICLISTspamspamMITVMA.MIT.EDU>
Sent: Wednesday, April 16, 2003 9:30 PM
Subject: Re: [PIC]: Product pricing


> Picdude wrote:
> > Google for "merchant account", "online payment processing" or similar.
> > First you'll find links to how to setup your own merchant account and a
> > custom website, but delving deeper, you'll find sites with host
> > providers that provide a service similar to yahoo store.  IE:  shopping
> > cart systems w/hosting and payment processing.
>
> Are there any that you know of or could recommend?
>

Hi Olin,

If you are prepared to set up a merchant account you can have things the way
you want them at a reasonable price. If you are looking at someone else to
host your eShop then you will have a hard time finding a good fit. Some
providers will limit the number of items you can offer, some will charge you
for changes to your price list, some will only pay you after you have
reached a certain balance, some will pay you after 30 days from the date of
your sale. Some have very bad order fulfilment facilities (the client may
not get a confirmation at the end of the purchase or there may be some other
browser related problem). Some have very long checkout procedures. Some will
want you to sign personal guaranties. The list goes on and on.

My advice is, if you have a good long standing relationship with your bank
talk to them first and investigate setting up a merchant account. If they
cannot help you directly they may have a partnership scheme with some other
bank that can. If your bank proves to be a dead end or you don't like what
they tell you, shop around at some of the other banks local to you.

Use google to find a "Payment Service Provider" that suits you. Look at what
they have to offer and seek advice regarding shopping cart systems that
integrate to their service. They will have demo sites set up for you to test
drive. Your bank or card aquirer may have a list of preferred PSPs and even
a list of dispraised PSPs

Regards
Sergio Masci

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2003\04\17@041538 by Nigel Orr

flavicon
face
pic microcontroller discussion list <> wrote on Thursday, April 17, 2003
12:23 AM:

>> Also, considering their recent legal issues
>>
> (http://www.cnn.com/2003/TECH/biztech/04/01/ebay.paypal.reut/)
> , I think
>> paypals is not a very good way to go around collecting money.
>
> Unless you're in the gaming/gambling business, this is a no-op.
>
> I've done over 120 transactions with Paypal as a seller, and more
> than 200 as a buyer. Not a single problem - ever, and I've used
> Paypal in my embedded systems business for the past two years, and it
> NEVER has been a problem. I also use it for my storefront business
> for phone and web orders, also with no problems.

Perhaps you could explain something that the paypal website doesn't...

If a customer wants to pay by credit card, do they still have to open a
paypal account, or is there a shorter process where they can purchase
immediately?

I've been looking at Paypal (for personal sales, not my day job), but it's
not so appealing if there is a delay between someone visiting my site and
being able to purchase from it, assuming most customers will not already
have a paypal account.

As for the complaints, the single biggest one is that accounts are frozen
by paypal at the first sign of trouble, I'm assuming that isn't such a
problem if the balance is regularly transferred to a bank account, but is a
huge problem if you keep a large float in the account for online
purchasing?

BTW Neil, I tried to guess Synthcom's website, and google came up with
http://www.synthcom.com , but it can't be found... I was hoping to have a
look at a real paypal customer's website to see how it looks from a
customer point of view.

In my brief search, Paypal came out top for cost for low volume sales, most
of the others either only allow debit cards or charge a monthly fee which
would be prohibitive for the volumes I expect to sell.

Nigel

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2003\04\17@042003 by Wouter van Ooijen

face picon face
> BTW Neil, I tried to guess Synthcom's website, and google came up with
> http://www.synthcom.com , but it can't be found... I was
> hoping to have a
> look at a real paypal customer's website to see how it looks from a
> customer point of view.

http://www.voti.nl/shop/order.html

> In my brief search, Paypal came out top for cost for low
> volume sales, most
> of the others either only allow debit cards or charge a
> monthly fee which
> would be prohibitive for the volumes I expect to sell.

http://www.kagi.com ?

Wouter van Ooijen

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2003\04\17@042614 by Alex Holden

flavicon
face
On Wed, 2003-04-16 at 20:24, Olin Lathrop wrote:
> I've developed a product that I'd like to sell on my web site in an
> automated way.  We've all seen "e-commerce" web sites, but I have no idea
> how to set one up or find the information to set one up.  Ideally, I'd
> like something that takes the shipping/billing address and credit card
> info, validates the card, charges the card which eventually transfers
> money to my bank account automatically or sends me a check once a month,
> then sends email to a designated address so that the product can be
> shipped.  I'd be happy to pay a commission for this service, say 10% of
> the sell price.

I've heard a few recommendations for WorldPay <http://www.worldpay.com/>
thought I haven't used them personally.

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2003\04\17@042906 by Neil Bradley

flavicon
face
> > Paypal in my embedded systems business for the past two years, and it
> > NEVER has been a problem. I also use it for my storefront business
> > for phone and web orders, also with no problems.
> Perhaps you could explain something that the paypal website doesn't...
> If a customer wants to pay by credit card, do they still have to open a
> paypal account, or is there a shorter process where they can purchase
> immediately?

You have to fill out information on their web site like name/address,
etc... and that will open up a Paypal account immediately. But one does
not need to deposit money in it nor will they be charged for it.

> I've been looking at Paypal (for personal sales, not my day job), but it's
> not so appealing if there is a delay between someone visiting my site and
> being able to purchase from it, assuming most customers will not already
> have a paypal account.

Well, as an example, I had someone Pay us via Paypal within 5 minutes of
us posting a "Request money" - to someone who did not

> As for the complaints, the single biggest one is that accounts are frozen
> by paypal at the first sign of trouble, I'm assuming that isn't such a
> problem if the balance is regularly transferred to a bank account, but is a
> huge problem if you keep a large float in the account for online
> purchasing?

You can have it pay directly out of any funding source - bank account,
VISA, Paypal, etc... So you don't need to keep a large amount of cash (or
any cash) in the account for online purchases. You can just purchase and
source it from any of your verified bank accounts.

> BTW Neil, I tried to guess Synthcom's website, and google came up with
> http://www.synthcom.com , but it can't be found...

Must be something wrong upstream or near you, then. Both primary and
secondary domain servers are responding with the correct IP association
and the web server is actively serving pages and has been for the past 70
days.

> I was hoping to have a
> look at a real paypal customer's website to see how it looks from a
> customer point of view.

In my case, I don't have a "buy here" link on my web site due to some very
specific instructions and cooperation from the customer are required
before a purchase can be made.

-->Neil

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ICQ #29402898

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2003\04\17@053604 by William Chops Westfield

face picon face
   > As for the complaints, the single biggest one is that accounts are
   > frozen by paypal at the first sign of trouble, I'm assuming that
   > isn't such a problem if the balance is regularly transferred to a
   > bank account, but is a huge problem if you keep a large float in the
   > account for online purchasing?

Gee, I always assumed the big complaint against paypal was from buyers
unhappy that they lost the credit card "protection" against purchases that
went wrong somehow (ie telling your credit card company to withhold payment
because a product was defective or not delivered.)  Of course, I've never
actually USED that capability on my credit card, and I'm vaguely encouraged
that paypal is so responsive against sellers that might be causing trouble.
It hadn't occured to me what that would look like from the sellers point
of view, if a buyer is dishonestly trying to cause trouble.


   You can have it pay directly out of any funding source - bank account,
   VISA, Paypal, etc... So you don't need to keep a large amount of cash
   (or any cash) in the account for online purchases. You can just
   purchase and source it from any of your verified bank accounts.

Buyer issues, rather than seller issues...

The biggest problem I ever had with paypal was on a particularly large
purchase (~$5k) The account wasn't set up to allow that large a transfer
from my bank account OR that large a charge to my credit card.  It was
easilly "solved" using several smaller transfers; I suppose it would have
been more interesting to call "support" and see if they could have fixed
it, but....

BillW

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2003\04\17@054230 by Wouter van Ooijen

face picon face
> Buyer issues, rather than seller issues...

As a seller, all buyer issues are my issues too!

> been more interesting to call "support" and see if they could

Maybe the biggest problem with PayPal is that they don't have any
support. Not that I ever tried (or needed to try), but googling for
something like "paypal horror story" is entertaining.

Wouter van Ooijen

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2003\04\17@070825 by Nigel Orr

flavicon
face
pic microcontroller discussion list <> wrote on Thursday, April 17, 2003
9:18 AM:

> http://www.voti.nl/shop/order.html

Thanks, that's helpful.  It looks straightforward, and fits in well with
the rest of the site stuff.

> http://www.kagi.com ?

Looks good, fees are reasonable, only problem is the transfer of money to
me in the UK, $35 for wire transfer plus whatever my bank might charge.
That might be significantly more than my profit, and I'd rather not let
them hang on to my money for a few months until it's worth paying the fee!
:-(

I guess I'll just go for paypal, and offer payment by cheque for UK
customers.

Thanks for the help and the pointer to your site,

Nigel

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2003\04\17@074012 by Olin Lathrop

face picon face
> I also use it [PayPal] for my storefront business for phone and web
> orders, also with no problems.

But you'll never know how many people avoided buying from you because they
didn't want to bother setting up a PayPal account or were businesses that
wanted to deal with a "real" business.


*****************************************************************
Embed Inc, embedded system specialists in Littleton Massachusetts
(978) 742-9014, http://www.embedinc.com

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2003\04\17@081112 by Olin Lathrop

face picon face
> I've heard a few recommendations for WorldPay <http://www.worldpay.com/>
> thought I haven't used them personally.

Their web site is very vague.  You have to call them to get pricing.  It's
hard to trust a merchant that won't clearly tell you what they do and how
much it will costs up front.


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2003\04\17@081118 by Sergio Masci

picon face
----- Original Message -----
From: Wouter van Ooijen <KILLspamwouterspamBeGonespamVOTI.NL>
To: <@spam@PICLISTSTOPspamspam@spam@MITVMA.MIT.EDU>
Sent: Thursday, April 17, 2003 10:41 AM
Subject: Re: [PIC]: Product pricing


{Quote hidden}

Wouter, when I first looked at your products I was put off purchasing from
you because of PayPal. Several months later, with continuous exposure to
your posts and recommendations from others that had already used you
products convinced me to try your products. BUT I still did not go through
PayPal, I went to the trouble of sending you an international money order
(money I could not get back if things went wrong). Is this ringing alarm
bells yet?

Regards
Sergio Masci

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2003\04\17@082011 by Nigel Orr

flavicon
face
pic microcontroller discussion list <> wrote on Thursday, April 17, 2003
12:38 PM:

>> I also use it [PayPal] for my storefront business for phone and web
>> orders, also with no problems.
>
> But you'll never know how many people avoided buying from you because
> they didn't want to bother setting up a PayPal account or were
> businesses that wanted to deal with a "real" business.

IMO, you never know that anyway.  There may be customers who will be put
off by Paypal's (apparently simple) credit card payment procedure, or by
Paypal horror stories (I can't think of any large corporation that doesn't
have 'horror stories' on the web, if you think it puts users off, consider
Microsoft!), there may be customers without card payment facilities who
would not otherwise have been able to purchase from you.

In my situation, I can't currently justify the fees of any of the online
payment services which take credit cards except for Paypal, so either I
accept some additional sales or none at all, the sums aren't difficult in
my case!  As long as I still sell at a profit, if no-one buys through
Paypal, nothing is lost.

There is also a perception that a site with 'carts' etc is more
professional and businesslike, certainly given the choice in the UK I would
sooner pay by credit card through paypal than deal with a 'company' I'd not
previously come across who expect me to send them a cheque then wait for it
to clear before they send me the goods!

When it comes down to it, I'll be selling something that I think people
need.  If a particular individual doesn't need it enough to jump through my
chosen e-payment hoops, then they lose out.  If this was my sole source of
income, my view would be _very_ different, but I'm sure there are others on
the list who have 'sideline' products, secondary to their main job or
consulting activity, that they'd like to make available to a wider audience
at initially low risk.  I'm not cutting people off from buying from me, if
they find it too nervewracking to put their credit card details and enough
info to verify them on a secure webpage, they won't be able to buy much
online.

I can see that it might put off businesses who want to deal with a larger
company, but again that isn't my market.

Nigel

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2003\04\17@083447 by Alex Holden

flavicon
face
On Thu, 2003-04-17 at 13:06, Olin Lathrop wrote:
> > I've heard a few recommendations for WorldPay <http://www.worldpay.com/>
> > thought I haven't used them personally.
> Their web site is very vague.  You have to call them to get pricing.  It's
> hard to trust a merchant that won't clearly tell you what they do and how
> much it will costs up front.

Ah, you're in the US right? I just had a quick look at their US site and
it has far less detail on it than the UK one (it was originally a UK
only service and is now owned by the Royal Bank of Scotland).

The basic service they do is called "WorldDirect" which is basically a
kind of merchant account that allows people to pay you using any common
credit or debit card. It's apparently much quicker and easier to get a
WorldDirect account than a proper online trading merchant account from a
bank, but the commission they charge is somewhat higher. They normally
"settle" your account (ie. pay you) every week, four weeks in arrears (I
think the delay is to allow the customer plenty of time to do a
chargeback if you defraud them).

Their UK pricing page shows the charges for the WorldDirect account as:

Initial setup: #85
Annual fee: #160
Credit card transactions: 4.5%
Debit card transactions: #0.50
Settlements: #0.35
Chargebacks: #10

Hopefully the US pricing isn't too much different to that.

They also sell some additional products such as a shopping cart system
called "click and build" and WorldAccess, which is basically a web based
PDQ console for taking payments by phone, fax, post, and in person.

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2003\04\17@084857 by Wouter van Ooijen

face picon face
> Is this ringing alarm bells yet?

It is, but engineering (even shop engineering) is choosing between the
various wrongs. The sale volume of my shop hardly justified the fees
required by the 'more serious' payment agencies at looked at a year ago.
Maybe I'll look again this summer when I have some time.

What kind of payment options would have been less intimidating to you?
Maybe Kagi? Or only those provided by real banks? Or everything that
uses SSL?

Wouter van Ooijen

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2003\04\17@085126 by Kayode Ayandokun

flavicon
face
Olin Lathrop <olin_piclistspamBeGonespamspamBeGoneEMBEDINC.COM> wrote:
>[...]
> I've developed a product that I'd like to sell on my web site in an
> automated way.  We've all seen "e-commerce" web sites, but I have no idea
> how to set one up or find the information to set one up.  Ideally, I'd
> like something that takes the shipping/billing address and credit card
> info, validates the card, charges the card which eventually transfers
> money to my bank account automatically or sends me a check once a month,
> then sends email to a designated address so that the product can be
> shipped.  I'd be happy to pay a commission for this service, say 10% of
> the sell price.

You need to have a look at WorldPay, http://www.worldpay.com, they offer
the sort of service that you require.  Basically you can host your site
anyway you like, but have your order page linked to the WorldPay secure
server by a simple HTML form which passes price and product info. The
customer then enters their credit card details in the payment page on
the secure server.  WorldPay then handles all the transaction
processing, security checks etc, debit the customer and pay you.

Kayode.
____________________________________________________________
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2003\04\17@085313 by Wouter van Ooijen

face picon face
> > Their web site is very vague.
> Ah, you're in the US right?

I'm in the Netherlands so I looked under the English flag but I still
find their description very vague. And I can't find whether they offer
any service to me (in the Netherlands) at all. Their website might look
'good', but such lack of clear infdormation puts me off.

Wouter van Ooijen

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2003\04\17@090807 by Dale Botkin

flavicon
face
On Thu, 17 Apr 2003, Sergio Masci wrote:

> Wouter, when I first looked at your products I was put off purchasing from
> you because of PayPal. Several months later, with continuous exposure to
> your posts and recommendations from others that had already used you
> products convinced me to try your products. BUT I still did not go through
> PayPal, I went to the trouble of sending you an international money order
> (money I could not get back if things went wrong). Is this ringing alarm
> bells yet?

On the other hand, while I like it when a merchant does their own credit
card processing so I can just use my card, PayPal is a close second.  I
usually have a small balance in my PayPal account, enough to cover little
odds & ends.

While there are horror stories galore about PayPal, obviously most people
are happy with them.  I'm sure that many others, though, simply won't use
them.  I want to eventually get a merchant account so I can accept cards
myself, but for now I work around it.

Dale
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2003\04\17@090816 by Alex Holden

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On Thu, 2003-04-17 at 13:52, Wouter van Ooijen wrote:
> I'm in the Netherlands so I looked under the English flag but I still
> find their description very vague. And I can't find whether they offer
> any service to me (in the Netherlands) at all. Their website might look
> 'good', but such lack of clear infdormation puts me off.

Although I can't see any specific mention of the Netherlands, the
pricing page gives the impression that they can "settle" to non-UK
banks:

> Settlement in any other currency, or to a bank based outside the UK is
> charged at #2.50 per settlement. The minimum amount that can be
> settled is #10.00, and the equivalent of #100.00 for all other
> currencies.

They have a form for complaining about the site here:
http://www.worldpay.co.uk/feedback.php

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2003\04\17@091216 by Dale Botkin

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On Thu, 17 Apr 2003, Alex Holden wrote:

> They normally "settle" your account (ie. pay you) every week, four
> weeks in arrears (I think the delay is to allow the customer plenty of
> time to do a chargeback if you defraud them).

That, and to get four to five weeks of float in addition to their
commission.

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2003\04\17@122413 by Sergio Masci

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----- Original Message -----
From: Alex Holden <spamBeGonealexspamLINUXHACKER.ORG>
To: <spam_OUTPICLISTSTOPspamspamMITVMA.MIT.EDU>
Sent: Thursday, April 17, 2003 1:34 PM
Subject: Re: [PIC]: Product pricing


> On Thu, 2003-04-17 at 13:06, Olin Lathrop wrote:
> > > I've heard a few recommendations for WorldPay
<http://www.worldpay.com/>
> > > thought I haven't used them personally.
> > Their web site is very vague.  You have to call them to get pricing.
It's
> > hard to trust a merchant that won't clearly tell you what they do and
how
{Quote hidden}

I think you'll find that as a merchant you will be bound to honour the
chargeback long after the four weeks. There will be a contract in place that
will give them the right to debit chargebacks directly from your bank
account and you will not be able to stop them. As a buyer, if you have a
problem with a merchant, (maybe your goods have not arrived) it can still
take you over two months to get your money back. In my opinion I think the
four week delay is just a bonus for them.

Regards
Sergio Masci

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2003\04\17@122821 by Herbert Graf

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> > I also use it [PayPal] for my storefront business for phone and web
> > orders, also with no problems.
>
> But you'll never know how many people avoided buying from you because they
> didn't want to bother setting up a PayPal account or were businesses that
> wanted to deal with a "real" business.

       I'd have to agree with Olin. A store that uses PayPal appears less
"professional" then a store using a "normal" shopping cart system.
Personally I would NEVER buy anything through PayPal, they have caused so
much harm to people I don't want to be the next victim, no matter the odds.
TTYL

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2003\04\17@123239 by Sergio Masci

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----- Original Message -----
From: Wouter van Ooijen <RemoveMEwouterspamspamVOTI.NL>
To: <TakeThisOuTPICLISTspamspamRemoveMEMITVMA.MIT.EDU>
Sent: Thursday, April 17, 2003 1:47 PM
Subject: Re: [PIC]: Product pricing


> > Is this ringing alarm bells yet?
>
> It is, but engineering (even shop engineering) is choosing between the
> various wrongs.

Yes it is BUT selling is not engineering. Selling is a black art. You can
have a good product that sells badly while your competitor has a far
inferior product that sells well.

> The sale volume of my shop hardly justified the fees
> required by the 'more serious' payment agencies at looked at a year ago.
> Maybe I'll look again this summer when I have some time.

I don't know what your sale volumes are so I cannot comment on this, but I
do know that if you make it easy enough for people to buy your products,
some will buy them with the intension of using them, receive them, put them
on the shelf and never use them.

If you get your eShop right adding new products and doing season specials
will cost you nothing more. The thing is not to get suckered into the
obviously easy solution. You start off paying through the nose and you
continue paying through the nose throughout the life of your eShop.

There seem to be two levels of "payment agencies" the eShop type which try
to provide complete or partial solutions which integrate into your site and
the "Payment Service Provider" (PSP) which processes your credit card
transaction for you. The PSP is kind of like a bank which takes someone
else's cheques and clears it for you and transfers the money into you bank
account. The "payment agencies" are more like mail order companies that list
your products in their catalogue, they send you a cheque when they receive
payment.

The "payment agencies" enable a merchant to sell products without a merchant
account. The PSP tends to provide merchant account driven facilities. Some
PSPs also offer varying degrees of eShop facilities. You don't have to do
everything yourself if you get a merchant account and go the PSP route. If
you get a merchant account you will be in much stronger position to dictate
terms. There are huge numbers of PSPs that compete vigorously with each
other for your business. They will offer you competitive rates and services.
You just need to look. Using a merchant account is nothing to be worried
about, it's just a special kind of bank account.

Typically you will need to pay your bank a set-up fee, a monthly maintenance
fee, and commission on each transaction. The set-up fee should be quite low
(maybe even non-existent for your bank), the monthly maintenance fee is just
like a maintenance fee on a normal bank account (normally quite low and will
probably by zero once you reach an agreed level of business), the commission
per transaction will vary depending on the level of projected business but
should be around the 2% mark. The commission per transaction should be
linked to the monthly maintenance fee (the higher the fee the lower the
commission). You should get payment to your account within 2 working
days of your sale. If your bank try's to push you into anything grossly
different, look for another bank.

A PSP will ask for a set-up fee (sometimes this will be zero depending on
the services you are asking for), a monthly maintenance fee (again this can
be zero) and either a commission or a flat rate per transaction. Commission
will be 1.5%+ depending on services, flat rate will be about 1+ Euro
depending on services. The commission tends to drop depending on the volume
of sales you achieve (look for banding structures). A decent PSP will
transfer funds to your merchant account within 2 working days. Don't accept
anything less here. Also your bank may have a list of preferred PSPs or even
a list of dispraised PSPs that you should avoid.

>
> What kind of payment options would have been less intimidating to you?
> Maybe Kagi? Or only those provided by real banks? Or everything that
> uses SSL?

Ultimately when I perform a transaction as a buyer I want:
   *    the transaction must be quick and unambiguous (2-3 pages for
personal details and payment - no special instructions on any of the pages
which I have to "try" to understand, no requirement to register with someone
else, distractions to complicate things)
   *    secure transactions (I have reasonable confidence that the credit
card acquirer has cleared this merchant - I don't want my details
intercepted)
   *    direct credit card payment (I trust my card issuer to reimburse me
if the merchant ends up being dishonest - I don't want a middle man that
gets between me and my card issuer and invalidates their obligation to me)
   *    I want a clear indication when something has gone wrong with the
order (I don't want to be left waiting for something I think I have ordered
and paid for which never arrives - this would really put me off the merchant
even though it might be the PSP or agent that is to blame)
   *    I want clear feedback as I perform the transaction (I don't want to
find that I have bought two identical items because the transaction was
successful but looked as though it did not complete causing me to retry -
again this would really put me off the merchant even though it might be the
PSP or agent that is to blame)

Regards
Sergio Masci

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2003\04\17@151722 by William Chops Westfield

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   But you'll never know how many people avoided buying from you
   because they didn't want to bother setting up a PayPal account or
   were businesses that wanted to deal with a "real" business.

That isn't really important if the number of paypal customer is big enough.
There are ALWAYS customers that won't want to deal with you because you
don't do something (accept purchase orders, offer credit, discount steeply
for their particular situation, etc.)  If the product is successful enough,
you'll get people telling you "gee, I wish you had some alternatives to
paypal", and by then maybe the income from paypal will pay for and/or
justify a "real" merchant account...

As for horror stories.  One has to compare paypal to the alternatives,
rather than look at it in isolation.  While it's less "convenient" to
complain about non-online-services, I've certainly heard plenty of horror
stories about checks, normal credit card transactions, and so on...

BillW

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2003\04\17@152732 by William Chops Westfield

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Oh yeah, I forgot one thing.  If you're selling to "industry" as opposed
to individuals, regular credit cards or checks may be just as "amateurish"
as paypal.  "REAL companies" want you to take purchase orders, and then
they'll delay actual payment as long as legally possible.  Standard
accounting practice, you know - hang on to your cash as long as possible.
I know a couple of people who have been really annoyed at how long it
took to actually get money out of legitimate large businesses.  And
I've been yelled at by finance for buying things by personal check and
expecting to be reimbursed...

Seems to me that paypal has some advantages to the seller, aside from
its simplicity.  When you get your money, you have your money, and you
don't have to worry about the seller-side implications of dealing with
the security required with handing credit card numbers...

BillW

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2003\04\17@155028 by Olin Lathrop

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>     But you'll never know how many people avoided buying from you
>     because they didn't want to bother setting up a PayPal account or
>     were businesses that wanted to deal with a "real" business.
>
> That isn't really important if the number of paypal customer is big
> enough.

Seems pretty important to me if you have 100 PayPal customers, but could
have 500 customers.  The point is that you don't know, so there is no way
to say how important or not it is.


*****************************************************************
Embed Inc, embedded system specialists in Littleton Massachusetts
(978) 742-9014, http://www.embedinc.com

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2003\04\17@182747 by Bob Ammerman

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And then there is the time that GE bought some of my services to recover
data from a disk (on an unusual operating system) they had 'forgotten' to
back up....

Of course, this was an emergency, so a PO had to be cut after the fact...

And then, accounting wouldn't pay me for many months until ....

I sent a blank magnetic tape to their receiving department so they'd have
some record of receiving something.

And then they paid me.

When the same thing happened several years later (they still couldn't
remember to make backups), I sent the blank tape right away and got paid in
something like 45 days.

Bob Ammerman
RAm Systems



{Original Message removed}

2003\04\17@211711 by Sean Alcorn - PIC Stuff

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On Friday, Apr 18, 2003, at 08:26 Australia/Sydney, Bob Ammerman wrote:

> When the same thing happened several years later (they still couldn't
> remember to make backups), I sent the blank tape right away and got
> paid in
> something like 45 days.

45 days? Wow that's pretty good! :-) I've found that the bigger the
company, the harder it is to get money out of them.

Sean

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2003\04\17@223028 by Katinka Mills

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> -----Original Message-----
> From: pic microcontroller discussion list
> [KILLspamPICLISTspamspamspam_OUTMITVMA.MIT.EDU]On Behalf Of Sean Alcorn - PIC Stuff
> Sent: Friday, 18 April 2003 9:16 AM
> To: PICLISTRemoveMEspamMITVMA.MIT.EDU
> Subject: Re: [PIC]: Product pricing
>
>
> On Friday, Apr 18, 2003, at 08:26 Australia/Sydney, Bob Ammerman wrote:
>
> > When the same thing happened several years later (they still couldn't
> > remember to make backups), I sent the blank tape right away and got
> > paid in
> > something like 45 days.
>
> 45 days? Wow that's pretty good! :-) I've found that the bigger the
> company, the harder it is to get money out of them.


Lol on the last Job I did for the Health Department of WA, I had to threaten
to call the Health Minister, before I got paid, the invoice was over 60 Days
old, which is funny in two ways, 1 the WA government has made a directive
that all accounts are settled within 30 Days (otherwise how can they expect
us to pay that quick ;o) and 2 the Purchase Order was over 1 year old, I
hate SMPS faults where the equipment runs for 4 weeks at a time before
falling over :o( and it was custom equipment with a custom PSU from an
Italian manufacturer that does not seem to exist, that was OVER engineered
(like it detects the current drawn by the cooling fans to determine if the
fans are ok, the slightest change on the Fan current and it shuts down, but
their is no trim pot to adjust the set point ??????? Stupid design.

Regards,

Kat.
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2003\04\19@102335 by Chuck Harkness

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My suggestion is to get the services of experts.  Just like
you, an expert can often do something in a few hours which
would take others weeks, longer, or never.

1) Contract a good full service accounting consultancy to do
an analysis.  Ditto marketing consultancy. Don't laugh.  The
cost might not be as high as you imagine and could be well
worth it in the longer term.  The study might be done in
drill-down stages so you can bail out if things are coming
out negative early on.   Also sometimes they will do some
work for low cost as a way to help a small business who
might become a big customer later on.

2) Check with your government about small-business help.
Here in the US the Small Business Administration has SCORE
(Service Corp of Retired Executives).  Great organization.

No, I'm neither an accountant nor a retired executive.
Technical.  But learned this the hard way a number of years
ago.  In my case I waited too long before getting help and
it was too late.   I think I could have been a retired
executive by now if I hadn't been so stubborn about trying
to "do it myself". :-)

Chuck H.

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2003\04\22@012542 by Charles Craft
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Just to get it into the archive.

SAM's Club has been offering credit card processing for as long as I can remember. It's called "SAM'S CLUB Payment Solutions" buried under "SAM'S CLUB Member Benefits" on their web site.

Never had a need for it so no feedback good or bad.

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