It’s not a $40 tool. The enhanced version of his tool that’s still just in prototype is going to be about a $35 tool and there’s one on the market for that price, but it’s not as good.
As far as the youtube video we have on but it was recorded at 3:00 am and it looks like it.
That’s your opinion. If you can save my employee 10 minutes a day and I pay my guys $12 an hour, with 200 working days per year it’s saving me $400 per year.
I’d pay an extra $20 for that tool, even if the damned thing wore out after a year.
Sometimes it’s easier to make a fast nickle than a slow dime. We can’t afford to let these things sit on the shelf while someone tries to decide if they want to part with 40 bucks.
Here is a pic of behind the counter at one of the local Chicago supply houses. This is what the tool looks like and the little core is what the tool removes and installs. This is what it looks like when the grabbing mechanism (what makes it different) is engaged.
Now would you pay $40?
On AC units I have not had enough trouble to pay $20 for a special tool to remove valve stems. My 2 cents. But only a few of the units that I work on have required a stem remover.
I’m a big fan of the fast nickle instead of the slow dime.
That being said, I don’t know what the global sales are of this product; 1000 could be a drop in the bucket, or a production run that would take a decade for you to burn out for all I know.
Would I pay $40?
Not willingly, but if I HAD to buy it for work, then I might very well pony up and do so.
If I HAD to pay $20 for a crappy one, I might very well decide to go $40 for something that makes my every day ever so slightly better.
If you’re going online, you can wing this stuff.
If you’re trying to get retail distribution, then you probably do have to listen to your wholesale distributors and retailers.
For clothing, the standard is (of MSRP)
25% for production costs
25% retailer
50% wholesaler
For branded RX eyewear (many styles, lots of style turnover, few sales per frame)
MSRP is about 20x production costs.
There’s over 3000 HVAC-R stores in the US alone. Plus there’s the whole automotive side for not only a/c systems but other systems in the car as well as the tires. There’s a few other industries that have these cores. This core is also used world wide in 196 countries, so there’s that whole market.
As far as the tool is concerned we’re actually have 4 versions on the patent: this one, an enhanced environmentally friendly one (about 35.99), a larger version for bigger valves and an economical heavy duty plastic one.
By the way, until I got involved with this I never even knew that those thingies in your tires were something that could leak or break and need to be replaced. 
And definitely we may have to revisit the pricing. It’s based on current costs and if we get the quantities up we can get the costs down.
Wow, the wholesaler’s really grabbing a lot there. Do they have the greatest risk?
This is what you need to look at, especially with a tool that could easily last several year. There is a downside to this sales pitch however. Many of these guys are billing hourly. If your tool speeds the process, you have effectively reduced billable hours as well. This in general makes you less expensive than your competitor, but its not always a good thing to be the cheapest, busiest guy in town.
This is why its an art form
I think this tool will be used mostly by commercial refrigeration guys and a/c guys for major installations. These systems have to run 24x7x52. Figure every grocery store, convenience stores, Kwik-E-Marts, restaurants, fast food. They can’t have down time for refrigerated goods and major a/c installations in big buildings have to get fixed quickly. It’s not like your local a/c repair guy who says he can’t get to your house until next Tuesday.
Also, the BLS 2008 projected though 2018 a 28% increase in employment due to increase in demands of the market.
Or, I could be wrong about it all but the only thing I’ve invested is a little time.
If you are expecting your market to be primarily commercial, you are dealing with a market with higher cost tolerance. Just like my computer shop is paying around $120/month for internet, to a home user, that woud seem insane, to us, the extra bandwidth saves us time. Something you could sell for $20 to the general public you could probably get away with $30 to businesses that have a legit use.
Something else to consider, don’t look at the price from the bottom up, go from the top down. Cost to manufacture $10 so we sell for $20. Try it this way, you sell them for $40 direct via internet, sell to distrbutors for $35 but offer some volume incentives. Order 50 pcs and sell for $32/ea, 100pcs $29/ea, 500pcs $25/ea, 1000pcs+ negotiable and be willing to go as low as $20.
You can also make the distributors/resellers sign a mutual agreement not to sell for <$40, such agreements are very common. This allows you to retain some serious profits, while not undercutting the distributors, nor can they undercut you, they can only make more money via purchasing volume from you.
Maybe $20 is doable, but you want to make money now while patent protection is still in place. They can’t get this tool from anyone else. A few years down the line you are going to see cheaper knockoffs pouring into the market, the goal is, make your money now, and move on to developing another cool tool.
If you have a solid patent, sell or license the rights to someone already making tools for the HVAC industry. I don’t want to sound discouraging, but you have little chance of ever making a penny of profit otherwise.
They are already in production.
They can stop. Making some, and even selling a few will make the rights more valuable. Bird in the hand, right?
We’ve had a few offers for licensing but the terms were just not that favorable. We do intend when we get the international patents to pursue licensing there.
We’re aware that this is a difficult task but not impossible. You could look at Microsoft DOS and licensing with IBM. IBM declined the licensing and Microsoft made billions because of it. Also, we always have the option if, after a certain amount of time, if we can’t get anywhere just liquidate the inventory at a small profit.
You probably don’t want to be in the tool manufacturing business.
If I’m correct, taking $2/pc for licensing instead of $5-10/pc for manufacturing would save you a lot of time, and give you the opportunity to invest your energies in developing new tools… or working a day job… or promoting instead of managing suppliers, inventory, supply chain, etc.
Well then, you are considering that. It’s not a bird in the hand until someone bites.
Um, that’s a little over optimistic, and not at all the situation you are in. Unless you’ve turned down a licensing deal because they wanted exclusive rights. If you did that, you’re taking a big risk. But it’s your time and money, you can do what you want with it, and I have always made profit and risk aversion the top priority of my business dealings either. Some things are just worth doing.
It’s not my money. I’m not the inventor. So far this guy has been told throughout the years that 1 - you’ll never be able to make a better tool than what’s currently on the market. 2- He was then told you’ll never find a manufacturer to build a the cost you need it to be at. So far he’s done both and now he wants to try the direct sales route. He’s got a couple of experienced, commission only sales reps lined up so I say go for it. He’ll know soon if it will be a success or if he has to switch gears and seek out the best licensing deal.
So what is this great tool and where can I get one?
My brother works in commercial refrigeration and I’d love to get him one if it’s as great as you insist.
Hampshire, this post for pics, and I don’t think it’s for sale now:
http://boards.straightdope.com/sdmb/showpost.php?p=15283500&postcount=23
