Quoted from CaptainNeo:
i've done purchasing for companies for years, and did them for companies that made parts for bally/williams in both metal fabrication and printing. I know a lot about what it costs to make what in the pinball world. Stuff it not as expensive to make when you are buying in bulk from a manufacturing perspective. It's not like buying from pinball life/marco/bay area. You guys look at these sites and assume manufacturers pay close to those prices. that is not the case. When you are making 1000's of games, the price for parts, assembly, programming and such drop significantly and only gets less when more games are made.
I didn't say anything about material costs... because honestly in the grand scheme its not likely what is JJP's choke point. You are bashing them from what you think is 300% profit margin (absurd.. but lets table that for a minute). JJP has effectively one revenue stream.. games shipping. That is the biggest constraint... they can't make revenue appear for games that aren't sold. Unlike a WMS that has lots of revenue streams and different divisions floating the boat... JJP has got a single stream. JJP does not have a diverse inventory of product to sell. It has to make EVERYTHING to live on... from shipping the titles it has. That means they can't live on the same kinds of margins a WMS could live on... nevermind the order of magnitude difference in volume of units. Less units, less diverse product base == you must have much higher margins per unit to even stay in the black.
Now add in that they are slow turning product around = that's higher development cost per title. Again, more pressure to require a higher margin per unit.
That's why all this comparison to what WMS did is stupid - JJP isn't like WMS. What were acceptable margins to WMS is irrelevant to JJP.
I doubt JJP is able yet to really leverage economies of scale - they were cash strapped and volume is still questionable. The last thing you need when you are managing cash flows is 1-2 years worth of inventory anchoring you down.
As to your insight into actual BOM costs.. who is comparing to retail here? We have plenty of data points of other manufacturers trying to squeeze as much as they can from the system too.
Is JJP per unit margins higher than Stern? Probably... is that greed? Not likely, they need that higher per unit because they don't have the volume or cost efficiencies that your comparison companies do.