Steve,

Quite frankly, I am amazed at how folks think about this. You have
obviously never thought about that computer on your desk, and how it can
be sold for $499! Or even your car, just go price the parts
individually some time.

See below,

Austin

Steve wrote:

> Austin Lesea <[email protected]> wrote in message news:<bvu1ml$[email protected]>...
>
>>Steve,
>>
>>As for older parts, they do not get any less expensive to make. So the
>>price drops until the yields are stable, and then stops dropping.
>>Happens to everyone. At some point, they get more expensive to make as
>>their quantities go down, and the fab line equipment gets more expensive
>>to run (obsolete processes).
>
>
>
> So why are the prices *identical* to the cent, at different suppliers,
> in different countries, 4 years apart?

They use the "manufacturer's suggested retail price." As mentioned,
these were very old parts, and the pricing was now stable.

>
>
>
>>That is also why we then go to a new and less expensive technology as
>>soon as we can! If we can make an FPGA for less, our business increases
>>as the number of applications that can afford FPGAs increases.
>>
>>As for why things cost less in quantity, that is Econ 101 (for non majors).
>
>
>
> I must have missed Econ 101, so could you explain why there's such an
> enormous difference in price between the following?:
>
> From:
>
> http://www.ebnonline.com/showArticle...89&_loopback=1
>
> XC2S400E & XC2S600E for $27 and $45, respectively, in 250,000-unit
> quantities, end 2002, and from:
>
> http://www.plis.ru/price.html?ID=124
>
> the cheapest you can get them for is $55.45 and $170.00 respectively,
> for <100 units.
>
> When we did accounts at uni we were taught that the larger the batch
> size the cheaper the product is because you spread the manufacturing
> setup charges across more units, but Xilinx aren't going to do a batch
> size of 100 for an order or 100 units.

You learned the right stuff. Still applies. If a disti orders 100
parts (and they do) we have to process just that many parts for that one
order. Disti's don't want to stock anything anymore, so that makes
costs go.

Imagine Xilinx' dilemma: what do we build? and when do we build it?
If we have an order for 100K parts spread out over a year, everything is
trivial, and less costly. But if we have seemingly random orders
popping in all of the time, we have to build ahead (risk) and sometimes
scrap parts that are not moving.

If you have any optimism about your business at all, it would be best to
enter into a agreement and let the disti (and us) know where you think
you are going, and how many you will need.


Distribution costs can't be
> much either because it only costs ~$9 to get a book sent to teh UK
> from amazon.com. The cost of wages for sales people is a fixed cost
> anyway, and the cost of the silicon itself is a variable cost which is
> independent of the batch size if you take the manufacturing setup
> costs separately.

We can't seem to convince disti's to work for free, however, so they
charge what they feel they need to in order to make a profit. Disti's
also have 200+ FAEs of their own on their payrolls to support their
products, as well as order entry systems, stocking(?), unsold inventory,
stocking losses, uncollectable accounts (deadbeats), etc.

As for the book business, I was an author, and if an author gets 1 cent
on their book, they are lucky. Ruthless business, with all of the money
going to the publisher and retailers. Like perfume, or music CDs, cost
of book: $3, price of book $75...... the $9 shipping is a complete
rip-off, they already made their profit, now they are icing their cake.

>
> So why are your small quantity prices so inflated?
>

Because they are a fair representation of the costs associated with
small numbers of parts ordered through distribution to allow for a
profitable business by the distis and reps. They also represent the
unwillingness of a customer to enter into a contract which would allow a
scheduled delivery of parts over the long term, which is where the real
savings start to kick in.

You commit, we commit. You do not commit, we supply product at a fair
price based on the fact that you will go away after the one order.

>
> --
> Steve