Ozark Bicycle wrote:
> Werehatrack wrote:
> > On 26 Apr 2006 11:25:54 -0700, "Ozark Bicycle"
> > <[email protected]> wrote:
> >
> > > Donald Gillies wrote:
> > >>
> > >> You mean retail for $125. They sure don't cost that much!
> > >>
> > >
> > >Just move that decimal one place to the left. 
> >
> > And then slice it another 50 to 80%, I suspect. 10:1 is typical for
> > manufacturing/retail ratios, but the disparity goes way up for fashion
> > items. I don't think there's much chance that a $225-retail Giro
> > helmet really costs ten times as much to make as a $20 Bell.
>
> Yep, I would guess the cost of manufacture of a ~$190 (retail price)
> helmet to be in the $4-6 range (i.e., buying one is a confirmation that
> Barnum was correct!).
Well, yes and no. While the *incremental* cost of a high-end helmet is
certainly within this range, the molds to make the helmets are not
cheap. When I worked as a reporter for a bicycle trade magazine,
someone at Giro once told me that a typical helmet mold (CNC'd from
aluminum) cost on the order of $100,000.*
Since a separate mold is needed for each size, a set of three molds
(S,M,L) is around $300K. The FEA software required to simulate impacts
(e.g., LSDyna) is not cheap either at ~$20K per seat. So there are
significant investments to be amortized over the helmet's lifetime.
Giro's top-end helmet used to be the Pneumo. Then they introduced the
Atmos. They've kept the Pneumo around because once they've paid off the
helmet molds, Giro's margins go through the roof--there's no reason to
retire a perfectly good $100K mold. But the huge costs to be amortized
should not be ignored just because the post-amortization margins are so
good. At $300,000 for molds, Giro has to sell about 3,000 helmets ($189
retail, $99 dealer cost) before they break even. They've certainly
broken even on the Atmos.
Also, while a cheap helmet might only require two molds (two shell
sizes, with a third produced via thick pads), a higher-end helmet will
have three or maybe four molds. Since the cheaper helmets cost less to
produce initially and require much less R&D time and are made in vastly
higher numbers, the economies of scale are amazing. Cheap helmets
spread lower costs over more helmets. Expensive helmets spread higher
costs over fewer helmets, which helps explain the amazing price deltas.
That's not to say that all helmets are reasonably priced. I've found
that a $100 Giro ($75 on sale) has about 98% of the functionality of a
$189 Giro. My only point is that one should not confuse incremental
cost with total cost.
Jason
* That was about a decade ago. Helmet mold costs may have come down due
to better, cheaper rapid prototyping technologies and 5-axis CNC
machines. Even so, helmet molds are expensive.
