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

Perhaps you should take an econ class, all kidding aside. I had a very
brief one in high school and the most basic concept (next to guns vs.
butter) is that of fixed costs vs. marginal costs. Even though they
don't *make* the parts in 100 unit lots, there are fixed costs
associated with selling them in 100 unit lots. This mainly has to do
with support, I would expect.

But there is also the issue of motivation. If you are running a company
that has customers buying literally millions of parts a year and
customers buying 100's of parts a year, are you going to give the small
customer anywhere near the same prices as the big customer? No, you are
going to shave every possible penny on the price you must to keep the
big customer from buying the competitor's parts. The 100 unit customer
is not even a consideration.

Besides, if you are buying only 100 of a part, is it a big issue if you
pay 2x for the part? If you are building a product, you are likely
selling the product for 3, 5 or even 10x your parts cost. Otherwise you
will be losing a little on each one you sell, and will be out of
business soon.


--

Rick "rickman" Collins

[email protected]
Ignore the reply address. To email me use the above address with the XY
removed.

Arius - A Signal Processing Solutions Company
Specializing in DSP and FPGA design URL http://www.arius.com
4 King Ave 301-682-7772 Voice
Frederick, MD 21701-3110 301-682-7666 FAX