Small maker raises prices to afford manufacturing in US, gets ZERO sales 🤡

Summary

In this video, the creator shares a personal story about the impact of tariffs on their open-source hardware project. The unexpected tariffs have significantly raised costs, leading to an inability to deliver pre-orders and leaving the creator financially strained. They explore the challenges of manufacturing in the U.S., explaining that it would be far more expensive than sourcing from overseas. The video also addresses misconceptions about manufacturing decisions, with a critical view on tariffs and their unintended consequences. The creator urges a more thoughtful, strategic approach to manufacturing and highlights the struggles faced by small businesses trying to navigate the complex global supply chain.

Takeaways

• 😀 The video discusses the impact of tariffs on small-scale, open-source hardware projects, highlighting the challenges faced by makers and creators trying to keep costs low.
• 😀 A maker working on an open-source hardware project shares their experience of significant cost increases due to tariffs, making it nearly impossible to deliver the promised product at an affordable price.
• 😀 The maker explains that tariffs caused the price of their project to increase by over $11,000, and they can't refund customers because the components have already been purchased.
• 😀 The maker's decision to try and get their product assembled in the USA would have cost far more, around $20,000 just for PCBs, which is far higher than the cost with Chinese components even after tariffs.
• 😀 The maker emphasizes that, despite trying to keep the price low, the increased tariffs have forced them to raise the price, which has led to zero sales since the price hike.
• 😀 The video touches on customer expectations and how consumers are often unwilling to pay significantly higher prices for similar products, even when the cost increases are due to tariffs.
• 😀 The discussion also includes criticism of the practice of pre-ordering products without having the necessary funds set aside for refunds if the product can't be delivered, which the maker acknowledges is a valid criticism.
• 😀 The video also explores the issue of sourcing materials and parts from China, with a pointed discussion on how many products consumers expect to be made in America without understanding the cost implications.
• 😀 There is a critique of the idea that tariffs alone will help revitalize American manufacturing without a broader, more supportive plan to address the industry's challenges.
• 😀 The video concludes by humorously referencing the maker's pet, tying it into the overall frustration with the situation, and stressing the importance of understanding the complexities involved in manufacturing and pricing products.

Q & A

What was the main issue the creator faced with the tariffs?

The creator faced a significant increase in the cost of their product due to tariffs on components sourced from China, leading to an over $50 per order increase. This made it impossible to fulfill pre-orders at the previously promised price, and they could not refund customers as the money was already spent on components.

Why did the creator choose not to manufacture the product in the USA?

The creator found that manufacturing the product in the USA would have been much more expensive. For instance, just the cost of the PCBs would be $20,770, whereas producing the product in China, even with the tariffs, was less costly. The price increase due to US manufacturing would have made the product unaffordable for customers.

How did the creator try to manage the costs before the tariffs hit?

Before the tariffs, the creator made strategic decisions like taking pre-orders to secure a quantity discount, purchasing components that often went out of stock, and carefully pricing the project to meet their target selling price. They hoped to offset the costs with future sales once they had stock.

What specific challenge did the creator face with pre-orders?

The challenge with pre-orders was that the creator had already spent the money on components in preparation for production. Once the tariffs were imposed, the increased costs made it impossible to deliver the product at the promised price, and they could not refund customers due to a lack of funds.

How did the tariffs affect the selling price of the product?

The tariffs caused the creator to raise the selling price significantly. Before the tariffs, the product was priced at $230, but with the tariffs, the price had to rise to $390 or even $430, depending on the tariff rate, making it unattractive to potential buyers.

What did the creator say about the likelihood of customers paying the increased price?

The creator expressed doubt that customers would pay the increased price, citing past experience with customers resisting price hikes for products in the $200 to $300 range. Despite some commenters claiming they would pay more, the creator noted that no one had placed an order after the price increase.

What was the creator's stance on business practices in relation to refunds?

The creator acknowledged the importance of having the funds to refund customers if something goes wrong, stating that not having money aside for refunds is a business flaw. However, they also highlighted that the inability to deliver on the product due to tariffs was a situation beyond their control.

What is the creator’s opinion on the idea of 'made in America' products?

The creator pointed out that even though some people suggested manufacturing the product in the USA, the high costs and uncompetitive pricing compared to China would make it impossible to sell. They emphasized that without government support or a structured plan, simply imposing tariffs without an alternative would not work.

How does the creator view the long-term effects of tariffs on their industry?

The creator believes that even if tariffs eventually decrease, many vendors have realized that their products are worth more than previously sold for. This means that prices will not go back down even if the tariffs are removed, and the increased prices may be permanent.

What point did the creator make about customer expectations in the context of repairing products?

The creator made an analogy comparing their experience as a repair person to customer expectations. They explained that if a customer buys a product made in China, they will expect to source parts from China for repairs. However, some people erroneously suggest that they should only source parts from America, which the creator argued doesn't align with the reality of global manufacturing.