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View Full Version : Need opinions on a product I have been selling



eagletalontim
01-06-2012, 02:23 AM
Hello all once again! I have been selling a product since 2008 or 2009 that uses the SX 28 chip in an automotive application. Since this was a hobby and I have no extra cash, I never got the product patented. Now in 2012, I have some serious competition who has hit me hard in price. Basically, $90 per sale loss to match is price. I can't get my product cheap enough to compete with them so now I don't know what to do. It's like they want me to "close my doors" so they can have it all. I do have an excellent reputation for my product and it is widely known in the car community I am in. This is an extremely hard decision and I don't know what to do....should I count my losses and say it was fun while it lasted? Switching to the prop is going to be more expensive for me since the chip is more expensive and the eprom is an additional charge added to it. Any way I have thought out is more expensive unless I have thousands of dollars to buy large quantities of everything. Any feedback on what I should do?

Ken Gracey
01-06-2012, 02:55 AM
You'll get many different opinions on this one, but my thoughts are that having the patent wouldn't have helped anyway because you mentioned that you have no cash. To defend your patents you need lawyers and the cash [and lots of it] to fuel them. You can only slow the competitor a bit by hiring even a cheap ambulance-chaser lawyer to deliver cease and desist threats to the competitor anyway. It's just not worth the expense. Further, perhaps there were enough design approaches to achieve this product that it was done in a manner different from the way you designed it. In this case you have nothing to pursue legally anyway. I just think it's best to keep the lawyers away from business provided entrepreneurial ideas fueled the initial innovation and selling the business as an IP package isn't part of the plan.

One aspect to exploit is that you have the quality, reputation and history of your product. You didn't share enough about the product, marketing, support and presentation to let us know if you've already assembled a professional presentation that conveys what you're offering. Are you doing all of this the best it could be done? Have you hired professionals for the web site, for example? Does the presentation look like an engineer was doing marketing - poorly - or does it reflect the physical existence of a company with expertise and a track record?

Also, how about this idea - make a revision to the product! We have a very successful product you probably own: the BOE. Soon we will release the PropBOE with a load of features. It'll come out about the same time as the multi-platform compiler, a new educational program, and it can also be placed on the Boe-Bot chassis. The popularity of the first product guarantees a certain level of success for the next version. Can you make a new edition of the product? Making a Revision B is the way to sell it to the same customers who bought Revision A.

I'm confused about the cost part. We still have hundreds of thousands of SX chips and you can have them for our cost. There's no need to switch to the Propeller unless you can add features to the product that it doesn't already have. Can you add video output, simultaneous processing benefits (are you counting a tach or managing fuel injection?), or other benefits that the competitor doesn't already offer? Are they just a straight clone of your design? No choice of processor can knock $90 off your cost.

Buying lots of inventory isn't always a good way to reduce your costs. Once in a while we do this, but it's not a good practice unless you have a guaranteed ROI in a given amount of time (and no better use for the cash).

I'm sure there's much more we could offer if we had a look into the actual product. I think the questions you ask are highly relevant, very important, and demonstrate the backbone of an innovative spirit.

Ken Gracey

eagletalontim
01-06-2012, 03:28 AM
Basically, the product replaces the stock control unit for the transmission or bypasses it depending on the customer's needs. All it does is read the RPM signal from the ignition coil, listen for 2 switch inputs (on / off), and control 2 solenoids in the transmission. Very simple design which was much needed in the car community I am in since the stock control unit has it's faults. The first version was 2 relays and 4 switches...very very simple, but took a long time to build. The version now actually used small electronic components and has a display to show the current gear. The problem I have run into is that I have companies who list my product on their website to sell which means they have to make a profit as well. I need a profit too since there is labor involved. With the other company (1 man show) building basically the same thing for 1/3 the cost, I can't afford to match his price. If I pull from the companies, it leaves an open door for him to jump right in. This is kind of a catch 22 situation. Since I did not go through the whole legal path to get the product commercial ready, I feel it would be best for me to cut the losses and let them have at it. It was a good 4 or 5 year run, but with something way cheaper than I can produce (without going to china parts), they can easily pull the entire market their way. I am sure they have not gotten FCC compliant certification either, but I feel I should stop while I am ahead so to speak.

Ken Gracey
01-06-2012, 03:37 AM
OK, I understand a bit better now.

You could pull back from the distribution and sell direct at a lower price for a while, running the product through the rest of the life cycle. I'm willing to bet that if your competitor jumps into the existing distribution channels his price will increase and your version will be less expensive since you'd exclude distributors. Is that a possibility?

If you didn't bother with FCC compliance and he didn't either (and it's required) then you wouldn't want to open up that barrier.

I'm assuming that this product sells for something between $200 and $300. I think the $90 price reduction the competitor offers is a function of direct sales vs. your model through distributors, which requires a higher price. I doubt he can make the same product for $90 less, but I imagine he could sell it for less since there are no distributors.

Are there improvements you could make to the product to release a new version? It doesn't sound like it from your description. It appears to be a solution to a problem more than a feature-rich must-have. Maybe you could confirm this as a fact.

eagletalontim
01-06-2012, 03:53 AM
The FCC thing does worry me if it is a requirement for automotive applications that do not receive or transmit wireless signals. The product usually ranges between $125 and $165 depending on how much stock I am able to order at once. The more stock, the cheaper. He has started his price at $60 which is basically impossible for me to match without losing all profit. There are improvements that I would like to do to the box, but the improvements cost money. With sales basically at a complete halt, I can't do much R & D except for what little I can scrounge from my day job pay. The SX is not powerful enough to implement in the new features, so I decided to begin with the Prop. I have already bought a prop proto board and have a semi working design that has not been tested inside my vehicle. With the cost of parts and labor, the FCC issue, and competition, I don't feel my product should still be out on the market as of now. Even if I could afford to go the FCC and patent route, the demand for the product is very little. I have sold maybe 200 to 300 over the past 5 years.

Capt. Quirk
01-06-2012, 03:55 AM
Can you sell the business to a company that sells and installs performance parts, chips, or similar.
Maybe a company like Banks (http://www.bankspower.com/)?

eagletalontim
01-06-2012, 04:17 AM
It will basically fit any 4, 6, or 8 cylinder vehicle that has an automatic transmission that uses 2 solenoids to shift with. The pressure control solenoid is something I have yet to figure out but I would love to. Some vehicles also have a torque converter lockup which is only active above a certain speed or RPM which would be nice to add into the box. The life cycle of the product is basically only limited to how many vehicles are still out on the road that the product can fit in. Most vehicles are years 89 to 99.

Also about the website design thing... I have been website programming for 11 years and used to be self employed making money from my websites :) I miss those days. Had to give it up to buy a house....go figure. The website I have is presentable to any market and not some thrown together type site like the other...never mind...not going there....

frank freedman
01-06-2012, 04:38 AM
Hello all once again! I have been selling a product since 2008 or 2009 that uses the SX 28 chip in an automotive application. Since this was a hobby and I have no extra cash, I never got the product patented. Now in 2012, I have some serious competition who has hit me hard in price. Basically, $90 per sale loss to match is price. I can't get my product cheap enough to compete with them so now I don't know what to do. It's like they want me to "close my doors" so they can have it all. I do have an excellent reputation for my product and it is widely known in the car community I am in. This is an extremely hard decision and I don't know what to do....should I count my losses and say it was fun while it lasted? Switching to the prop is going to be more expensive for me since the chip is more expensive and the eprom is an additional charge added to it. Any way I have thought out is more expensive unless I have thousands of dollars to buy large quantities of everything. Any feedback on what I should do?

<<<It's like they want me to "close my doors" so they can have it all. I do have an excellent reputation for my product and it is widely known in the car community I am in. This is an extremely hard decision and I don't know what to do....should I count my losses and say it was fun while it lasted?>>

IMHO, not knowing what you have done, but my own answer would be "HELL NO!!!!!" Play their own game against them. This product is not the thing keeping food on your table etc, so if you feel they are targeting you, and not just a market of opportunity, its time to hit back. Go full on open source on the project, retain copyrights etc, but put everything out there to the extent that only those who can not possibly do it themselves could need to purchase their product. Release a kit form ranging from bare board to full on Heathkit quality kit complete with pretty pictures. Once I put together a major field upgrade instruction for a portable X-ray system based on HTML and presentable on any computer you had at hand. HTML let me create a very professional and highly usable upgrade instruction. Once done, it cost nothing additional to reproduce. Showcase your designs and merits to the fullest and derive the benefit of having many more potential clients seeing the skill and value of your craft. May be worth much more than you could make by selling this widget. And yes, release a new design based on the prop and optimize the hell out of it as well. So, what then have you really lost? You learned much that can be recycled building the widget, you made money for a few years by selling the widget, and the concept has proven of value through the newcomers trying to grab your market share as well as whatever else they can gain. I would say you got a heck of a bag of gold out of this now, and a reputation and track record through designing and following through on a successful product.

On to the next project,


Frank


As to the FCC issues, since you did not mention the vehicle this is designed for, I would not be worrying so much about the product in conjunction with devices that transmit and receive signals so much as shielding and RF suppression of whatever your box generates so as not to interfere with the normal functioning of the systems in the car, many of which run on a CAN in newer cars.

Capt. Quirk
01-06-2012, 04:42 AM
Your product seemed like it was a fit for tow vehicles. Perhaps with the Propeller, and upgraded for newer
models, you may be able to create a marketable niche that ECU performance chips can't compete with.

There wasn't anything like your product on Bank's web site.

Ken Gracey
01-06-2012, 04:43 AM
Perhaps the most valuable input I can provide is to use our Field Application Engineers (FAEs) in Parallax Semiconductor. You can call them for free advice and start to form a relationship with Daniel, David or Chris. Typically you'll start with our Tech Support when you first call, but when they understand you're designing a product you can get switched to our FAEs for support. Daniel has experience with pressure sensors in another unrelated application. They'll get familiar with the product and provide limited assistance along the way. This can be a substantial time savings.

Sounds like the marketing presentation is not the challenge here. And the opportunity might lie in making a new product with more features that interest your customers.

What Frank says above is so true, too. Motivation and going to battle is very important. Don't roll over.

Ken Gracey

Capt. Quirk
01-06-2012, 05:31 AM
I thought about a bit, and realized an ECU Tuner / Programmer (http://www.bankspower.com/products/group/2-Tuners%20&%20Programmers) might do the same thing.
So with the products life cycle ending, and future niche maybe doubtful, perhaps open-source is your best option.


Showcase your designs and merits to the fullest and derive
the benefit of having many more potential clients seeing the skill and value of your craft.
May be worth much more than you could make by selling this widget.

So, what then have you really lost? You learned much that can be recycled building the widget, you
made money for a few years by selling the widget, and the concept has proven of value through the
newcomers trying to grab your market share as well as whatever else they can gain. I would say you
got a heck of a bag of gold out of this now, and a reputation and track record through designing and
following through on a successful product. .

Loopy Byteloose
01-06-2012, 03:10 PM
I am not exactly sure what is involved in your manufacture, but if someone else has found a profitable way to make it for less - some things are quite apparent.

1. They are using something other than an SX28 as it is no longer being sold. Microchip makes a pin compatible alternative PIC that is somewhat slower at 20Mhz top end.
2. They may be exploiting fabrication in China - which you can too. Contact a PRC embasy and ask them who to contact. They have people that do help. One site that does or did do this is Futurelec.com.

Neither of these are very appealing realities if you want to do business in America and be loyal to Parallax. But they are worth considering if quiting business is your likely next step. But it is certainly worthwhile to sit down with someone from Parallax and see if you can product a next generation item that is more value.

Patents are over-rated. Ken points out that you not only have to own one - you have to defend it. In today's world, a $30,000 patent can easily demand millions of dollars in legal defense.

Judging from our sales volume, there is a possibility that the competitor is an over-enthusiastic idiot that may drop out of the market. Keep in contact with your customers and ask them if this guy is really delivering good product.

eagletalontim
01-06-2012, 11:25 PM
I am really liking the idea of the open-source product to let customers tinker with a pre-made kit that I would sell. Having it open source would allow for more traffic to the site which in turn would boost up sales due to alexa ranking and google pagerank. If I did go open source, I would definitely need some help getting to that point with the Prop. Should I start a new thread for the open source project development? I know I will need a lot of help switching to the Prop. Once switched, I could either send customers to parallax to purchase the key to program the box or sell them from my site. Would this be a better route to go?

bill190
01-06-2012, 11:54 PM
I would say offer the kit and a finished product.

That is because many automotive types seem to be more "mechanical" and less "electronic" in nature.

Also an old sales trick is to offer several different models of something, each with slightly different features. Then it becomes not if they will buy your product or not, rather which of your products they will buy!

And the differences might just be color. Say a red version, a blue, and black.

eagletalontim
01-07-2012, 12:42 AM
That is kind of what I was thinking of doing. The new version would have modules that could be plugged in to let users build their own add-ons giving them access to several different pins on the Prop to develop their own custom mod. One big problem that I have run into is the guy who took the product from me is duplicating everything I release and calling it his exclusive feature. So every time I release something new, he will copy it and sell it cheaper. I guess that is the business.