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manufacturing cost
2

manufacturing cost

manufacturing cost

(OP)
I wonder what might be the difference in manufacturing cost between the following 2 roller chains.

The two chains are identical in everything except the second chain is 30% wider than the first. So they both have the same chain plates, same construction, but the roller, bushing, and pin on the second is 30% longer than the first.

Will it equates to a 30% increase in price?

Thanks

RE: manufacturing cost

No. In mass production I'd expect the wider chain to be more expensive by a little more than increase in material cost, say  $2 per lb, at a rough guess. Of course they'll charge you a lot more than that.



Cheers

Greg Locock

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RE: manufacturing cost

(OP)
I don't understand why they would charge a much higher price if the cost is increased only a little?

Do they think the CUSTOMER would expect it to be much more expensive and so they can charge a much higher price? What's the deal behind it?

When you consider a regular chain and a o ring sealed chain, the o ring chain is slightly wider and has the o ring. But the price is increased substantially.

RE: manufacturing cost

It could depend on a lot of factors beyond material usage:
  • Production speed: The one that is faster to make is probably cheaper.  This may or may not be dependent on size.  Perhaps the larger one is faster to make
  • Production volume: If one is made in significantly smaller quantities, it is likely more expensive.  Consider impact of automation and number of setups/year
  • market: drives production volume; also affects inventory and carrying costs for distributors

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RE: manufacturing cost

Adding the O ring adds several additional processes to the manufacture, and parts. You have to cut the grooves and install the O rings.

Since the resulting product is substantially better they can charge more for it.

Fortunately most of us  live in a rough approximation to a free market, where we are prepared to reward people who make better products.

Oh, and if you don't think the O ring chain is a better product, buy the chep one.

For goodness sake, don't whine about it.

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

RE: manufacturing cost

(OP)
I'm not whining about anything. I just want to have a better idea of what algorithm the manufacturers use when determining the price.

Thanks for the help.

So basically the price is often not directly related to the manufacturing cost. In another word, if a product can be made better even if the manufacturing cost stays the same (or even go down), it can still cost more to consumers.

RE: manufacturing cost

Sure. Apple Computers. iPods. Harley Davidsons. Lots of Sony stuff. Mercedes Benz. Bose sound systems. None of them cost significantly more to make than the competition, they all sell at a premium because they are perceived to be better by the people who buy them. I agree with the market's prejudices in some cases, in at least one of the above I think there is an outright fraud taking place.

I frankly have no idea how prices are set in the retail market.

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

RE: manufacturing cost

The material costs are probably 1/3 of
the product price as a rough estimate.
I would expect the price to increase
by 30 percent of 1/3 the total cost plus
some little marginal cost to finish the
extra length of material thru the shop
for the finish grind or whatever.

RE: manufacturing cost

"So basically the price is often not directly related to the manufacturing cost. In another word, if a product can be made better even if the manufacturing cost stays the same (or even go down), it can still cost more to consumers."

You got it. That's how most companies increase their profitability. They know that they can sell their product for X dollars, so reducing the cost to manufacture that product equals more profit.

RE: manufacturing cost

Another expample is the movement to clothing products to Asia or Central American countries. The cost to manufacture clothing is less in many countries yet none of these savings get passed on to consumers.

I actually saw an operation in New Jersey which unpackaged London Fog coats from Chinese boxes and repackaged into US sourced packaging. The price of the coat was higher because of the brand name. By the way the warehouse was staffed with almost entirely Spanish speaking people and I assume some of these were illegals.

RE: manufacturing cost

Quote:

"I actually saw an operation in New Jersey which unpackaged London Fog coats from Chinese boxes and repackaged into US sourced packaging"

Isnt that ^^^^ illegal?

I mean if it says made in china thats one thing, but changing the manufacture origin on something has to violate some trade rule or otherwise.

RE: manufacturing cost

Autoguru--my company bumps up the price way over costs on certain jobs that are a PITA to run through the shop. We either get compensated for our grief or the job goes away, to our relief! Didn't mean to rhyme, but it came out that way.

RE: manufacturing cost

Swall- exactly. Some customers each time they call (on the same job) teh rate goes up.

RE: manufacturing cost

NickE
I didn't say they changed the country of origin but the packaging (box) because the customers and employees first off cannot read Chinese on the boxes but also to not show Chinese product on the their shelves or warehouses. The coats had the "made in China" on the labels inside. This particular retailer has huge automated storage and retrieval warehouses. They proudly show off the warehouses to people taking tours but do not want to show the people how much foreign product (probably greater than 75%) they sell.

RE: manufacturing cost

Quote:

"So basically the price is often not directly related to the manufacturing cost. In another word, if a product can be made better even if the manufacturing cost stays the same (or even go down), it can still cost more to consumers."

Lets not forget that some of these "premium" manufacturers have lots of money sunk into these products in Development costs. Maybe it does cost less to mfr, but didn't a team of engineers figure that out (god knows, I don't work for free). And also, the difference between the "quality" discounters and major mfr's are the costs spend developing products that WILL NEVER come to market.

Wes C.

RE: manufacturing cost

wes616
I would agree with you but the actually reason for higher prices is lack of competition in that particular market place. Intel who dumps billions into research and development would gladly charge a 50% premium for their processors except for AMD. GM built terrible quality cars and made billions until the Japanese started kicking their butts. Sometimes there is a perception of better quality from some manufacturer but it can be deceiving. Older Harley Davidsons were not the same quality as present day Harleys.

I do not pity the manufacturers who have to invest millions to develop a product. I and the board of directors look at it as an investment and expect a good ROI with some risks associated with its development. The products which never came to market, failed because of bad decision making, poor execution or a mirade of management controlled failures.

RE: manufacturing cost

BillPSU,

Good points taken. I agree that in many areas, a healty competition can drive consumer costs down. Many of the tier 2 manufacturers that you point out begain their lives manufacturing products that others have spent time developing. While focusing heavily on manufacturability of a proven product, the risk is lower, thus the product can be offered at a low rate. The OEM then must take steps to maintain a competitive edge, by investing in improving manufacturability or to develop newer better products.

My origional point was to show, in my experience, why the cost of a product may stay the same, or increase, even though the cost to make the product has decreased. This happens in many situations though, not just the ones that have little competion.

In many cases, the cost of both producers increase, as their ad and marketing budges increase, as they vie for market share...

It would be easy if cost of material, or cost of development or any other singular cost would contribute to the pricepoint of a product, but the reality is that a butterfly can flap its wings in China, and the cost of my i-NEW will go up or down for no real good reason (Maybe now that he's retired, Allen Greenspan can tell us all).

Wes C.

RE: manufacturing cost

(OP)
Are mechanical components such as needle bearings assembled by hand or by machine?

RE: manufacturing cost

(OP)
Can you guys check out this chain?

http://tsubakimoto.com/products/chain/conveyor_chain/bearing_bush_chain.html

It uses actual needle bearings between the pin and the roller instead of bushing. So I'm guessing this chain would be a lot more longer lasting. But since it's not very widely used, I'm guessing it costs significantly more to produce. It seems it's only used on conveying applications where precise displacement is important.

Compared to a regular chain bushed chain, how much more costly will this "needle bearing chain" be in terms manufacturing cost?

Thanks for the help.

RE: manufacturing cost

2
Good grief guys, get a Marketing 101 text and do some research on pricing strategies.  There are several strategies out there, and very few are directly related to the actual cost of manufacture (i.e. cost + %).

Autoguru, it doesn't matter what the cost difference is to Tsubaki.  They will price the chain according to what they feel the value is -- probably comparable to a high-strength, steel reinforced timing belt.

It may cost them three times as much as standard roller chain to make, but they may very well charge five times as much. If customers perceive the value, then it will sell.  If not, they will feel the pressure to lower the price. Basic supply and demand.

Swall - at my company, we call that strategy "go-away" pricing.  We'd rather you go away, but if you insist we're going to make sure we make money at it!

RE: manufacturing cost

(OP)
I don't think the needle bearings are worth it for its cost. Even though it may decrease the pin wear rate, (by a lot?), the chain will still die when its fatigue life ends.

Usually a normal chain only has a life of 15000 hours under ideal lubrication condition and installation. They needs to be replaced once the elongation reaches a certain limit. But this "needle bearing" design can increase the wear life drammatically so the chain will be limited by its fatigue life.

I'd like to find out more about fatigue life calculation. Do you think a chain can last 50000 hours if there are no pin wear elongation?

Thanks

RE: manufacturing cost

There seem to be two conversations going on here: Price vs. Cost and chain engineering and costs. I really like the Price vs. Cost portions as this is typically not seen by the average engineer. I suggest that DReimer (to whom I gave a ) start a new thread.

Best regards,

Matthew Ian Loew


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RE: manufacturing cost

(OP)
While the needle bearing joints can extend the life of the chain drammatically, it'll do so at a very expensive price. For example, it might be 3 times as expensive as a regular chain.

That might not be cost effective if the machine only last twice as long as a normal chain. Normal chains can last up to 15000 hours if everything is ideal. For a machine that has a life of 20000 hour, clearly it's not worth it to get a chain that cost 3 times as much.

So my question is, what are the lives of common industrial machines that uses the chain drive? such as pumps, fans, compressors, ect... (in hours).

Thanks.

RE: manufacturing cost

Jeez, for a guru you seem to be asking an awful lot of questions.

Typical lives for production machinery are 10000-80000 hours, although the latter is probably unrepresentative.

We still use some pre-war presses, albeit extensively refurbished.

Cheers

Greg Locock

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips.

RE: manufacturing cost

(OP)
But those hours can be extended almost indefinately if there are rebuilds (repeatedly)?

I do ask a lot of questions since I'm curious but also because I need the answers.

RE: manufacturing cost

Autoguru, noting can be extended indefinitely, there comes a point where the rebuilds are too expensive and it would be cheaper to buy a new machine.  

Whether the needle bearing chain is expensive depends on your application and what you are comparing it to.  How much does it cost to replace the cheaper chain?  If minimizing elongation is a vital part of your selection process, then the higher price for the chain might be insignificant when you compare the alternatives.  This company would not be selling this chain if someone did not recognize the value of it.  Just because it is more expensive does not mean it is not the better value.  

For a car company looking to do things cheap and make money on spare parts and repairs, the needle bearing chain is probably not worth the cost, but to the end user who must do the maintenance, it might be worth much more.

RE: manufacturing cost

Mloew,

Thanks for the star - my first!

I'm not sure I'm qualified to start a whole thread on this subject.  I just took a business course a few years ago and we spent a few hours on marketing.  Given that I'm pretty cynical about marketing I found the pricing strategies the most interesting and relevant to me.

mbensema: this is one of the things vendors can't seem to grasp with oem companies (like the one I work for).  We're not interested in chain with 10 year service life.  We just want something that will outlast our warranty!  Ditto for so many other types of products - these guys need to sell the end users on this stuff so that they will demand it in the machinery they buy.

Dean

RE: manufacturing cost

"these guys need to sell the end users on this stuff so that they will demand it in the machinery they buy."

That is exactly what I tell our salesmen :)

RE: manufacturing cost

(OP)
Back to the original topic. I'm still talking about the manufacturing cost. (not the sales price)

How much would adding a small idler sprocket add to the cost of a chain drive?

Thanks

RE: manufacturing cost

"How much would adding a small idler sprocket add to the cost of a chain drive?"

However much the idler sprocket cost plus mounting/attaching hardware.

RE: manufacturing cost

(OP)
Let's say it's a chain drive with a ratio of 3:1.

It's often said that the sprockets are cheap and chains are expensive.

For sprockets, the smaller one will be cheaper.

The idler sprocket will be about the same size as the small driving sprocket but it's not really under any load, therefore I think it can be made more cheaply.

Therefore my rough guess is that the idler sprocket will add no more to 5% of the cost of the drive. But that's only my guess.

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