Ask HN: Is price of one Dropcam($149) overpriced?

#1

Post by throwawayacct10 » Thu, Oct 23, 2014, 7:56 PM UTC

I made some preliminary estimates and found that drop cam bill of materials (BOM) should be less than $50 (camera sensor is about $13). Why is Dropcam $149? Are they marking up the price or am I missing something in BOM? Also, if they are recording for seven days...they must be uploading 1TB/day. Do you think that's really possible?

I believe dropcam price can be much lower but they choose to mark-it up. I would like to know from knowledgeable folks here if I am right.

Re: Ask HN: Is price of one Dropcam($149) overpriced?

#2

Post by wmf » Thu, Oct 23, 2014, 8:17 PM UTC

Once you consider ~30% retail margin and ~30% gross margin for Dropcam themselves that only leaves a COGS of ~$75. That's not particularly overpriced.

Re: Ask HN: Is price of one Dropcam($149) overpriced?

#3

Post by throwawayacct10 » Thu, Oct 23, 2014, 10:26 PM UTC

wmf wrote: post #2

Once you consider ~30% retail margin and ~30% gross margin for Dropcam themselves that only leaves a COGS of ~$75. That's not particularly overpriced.

I see it now. Thanks very much.

But isn't 30% a lot of margin in hardware? Even software companies nowadays have problems with that margin.

Re: Ask HN: Is price of one Dropcam($149) overpriced?

#4

Post by wmf » Fri, Oct 24, 2014, 1:53 AM UTC

throwawayacct10 wrote: post #3

wmf wrote: post #2

Once you consider ~30% retail margin and ~30% gross margin for Dropcam themselves that only leaves a COGS of ~$75. That's not particularly overpriced.

I see it now. Thanks very much. But isn't 30% a lot of margin in hardware? Even software companies nowadays have problems with that margin.

Gross margin is used to pay back your NRE, so net profit is lower.