I was surprised he didn't take these into account. Not to mention quality control, or accounting for market fluctuations in price and manufacturing costs. The price is calculated to be a reasonable bet to pay for periods of really high costs from profits in periods of low costs.
Quality control in a typical product is really a bigger deal than most hackers think. He didn't account for the fact that if you go to china or hong kong and contract a manufacturing organisation to build your kettle, it's very likely you'll get your first shipment, coming in on your boat or plane and half the kettles are dead or defective or dangerous on arrival. There's nothing to do with those but throw them out, or maybe sell them back over to india for recycling, and the cost of those lost sales is built into the price of the not defective kettles.
The maths here assumes you have no shipping costs and no defective products, no manufacturing problems and no price fluctuations. Doesn't seem very realistic.
QC is tabulated under "various manufacturing costs". And yes, you are correct, it doesn't have shipping and dead goods costs. But I still think it's entirely serviceable as a back-of-envelope calculations
I take your point and it's a good one. I Think probably a pitfall is when you never go beyond the level of detail and research of your back of envelope calculation when, say, setting up a kickstarter. Manufacturing has a lot of pitfalls and it is very challenging, especially for electronics, to account for all the things that can go wrong, or all the hidden costs, or the peculiarities of retail infrastructure, supply chains, and retail, if you've never done it before. Not to discourage anyone from trying, but I think this is where a lot of crowdfunded projects can fail.
Quality control in a typical product is really a bigger deal than most hackers think. He didn't account for the fact that if you go to china or hong kong and contract a manufacturing organisation to build your kettle, it's very likely you'll get your first shipment, coming in on your boat or plane and half the kettles are dead or defective or dangerous on arrival. There's nothing to do with those but throw them out, or maybe sell them back over to india for recycling, and the cost of those lost sales is built into the price of the not defective kettles.
The maths here assumes you have no shipping costs and no defective products, no manufacturing problems and no price fluctuations. Doesn't seem very realistic.