Stern: Cost to make a machine

(Topic ID: 155483)

Stern: Cost to make a machine


By newpinbin

2 years ago



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  • 170 posts
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  • Latest reply 8 months ago by newpinbin
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    There are 170 posts in this topic. You are on page 1 of 4.
    -3
    #1 2 years ago

    What is the general/average price Stern is selling a machine to a distributor for?

    Say a premium machine is sold at $7000 to the public, how much do a distributor make and how much does Stern make on each machine?

    #2 2 years ago

    Not sure but I've been told "No game project is too big, no fee is too big".

    19
    #3 2 years ago

    People in the know will definitely be willing to post this for you.

    10
    #4 2 years ago

    I am sure Stern and the distributors will be on here any second to brief their profit margins.

    #5 2 years ago
    Quoted from SealClubber:

    I am sure Stern and the distributors will be on here any second to brief their profit margins.

    LOL, Stern won't even answer the phones.

    #6 2 years ago

    Nor, do they return phone calls or emails.

    16
    #7 2 years ago

    42

    #8 2 years ago

    .

    #9 2 years ago

    You're not even allowed to post what machines sell to consumers for. Pinball prices are for illuminati only.

    -1
    #10 2 years ago
    Quoted from DefaultGen:

    You're not even allowed to post what machines sell to consumers for. Pinball prices are for illuminati only.

    It seems to be that way. They must not be very much to make then since it's such a secret ....Why are they so expensive to purchase then?

    #11 2 years ago

    That's not really surprising that this isn't known. Car manufacturers and dealers don't publish their profits either. Cargument for the win!

    #12 2 years ago

    YouTube Milton Friedman profit.

    Everything you need to know will be found there.

    Note: I want every pinball company and every distributor to make a boatload of money. Means they will be around for a very long time.

    #13 2 years ago
    Quoted from Trekkie1978:

    YouTube Milton Friedman profit.
    Everything you need to know will be found there.
    Note: I want every pinball company and every distributor to make a boatload of money. Means they will be around for a very long time.

    Says nothing about Stern...

    #14 2 years ago

    No way private companies such and stern and these distributors will ever share profit margins with anyone but their banks, accountants or the owners of the company. But I bet the margins are much less than you'd think.

    #15 2 years ago
    Quoted from newpinbin:

    What is the general/average price Stern is selling a machine to a distributor for?
    Say a premium machine is sold at $7000 to the public, how much do a distributor make and how much does Stern make on each machine?

    When you buy a car, do you ask the dealership how much it costs to make a car? Do you call the plant it is made at?

    #16 2 years ago

    That's a good comparison^ but we can always speculate.. I'd say it's roughly $1500-2000(probably less) to make the machine. Distributors make around 500-1000 per machine and the manufacturer takes home the rest.

    I'm probably way off

    #17 2 years ago
    Quoted from Bowlingpin:

    That's a good comparison^ but we can always speculate.. I'd say it's roughly $1500-2000(probably less) to make the machine. Distributors make around 500-1000 per machine and the manufacturer takes home the rest.
    I'm probably way off

    All depends on how much product they can sell. There margins, I'm sure, depend on how many games they sell.
    if they only sell 500 of one game and 1000 of another, that is a big difference if the the bill of materials is the same.

    #18 2 years ago

    Very true, didnt really consider material numbers vs production numbers.

    #19 2 years ago

    Also keep in mind that material costs go down per unit when items are ordered in large quantities.

    Also keep in mind, labor costs in the US aren't cheap--wages, plus health insurance, payroll taxes, and a whole host of other things. Then there are licensing costs, development costs, plus all other incidentals that go along with bringing a product to market. Plus, there are facility costs, property taxes, utilities, insurance, legal costs, patent costs, etc.

    A lot more goes into the price of a manufactured item beyond just the BOM.

    #20 2 years ago
    Quoted from chuckwurt:

    No way private companies such and stern and these distributors will ever share profit margins with anyone but their banks, accountants or the owners of the company. But I bet the margins are much less than you'd think.

    Typically companies that have smaller margins sell much more product or have a boat load of competition. I think they're larger than you think.

    #21 2 years ago
    Quoted from Bowlingpin:

    I'm probably way off

    I'll agree with that.

    #22 2 years ago
    Quoted from Toasterdog:

    Typically companies that have smaller margins sell much more product or have a boat load of competition. I think they're larger than you think.

    I'm thinking 25%ish with considering indirect costs as well. Much more than that, then good for them. That's impressive.

    #23 2 years ago

    While we don't know the exact numbers, it's safe to say that profit per machine is up, up, up. Pros are higher than ever and the "real" version of the game, the premium, is now at least 75% more more than a $3800 shipped fully featured SM in '07.

    This is only sustainable in the micro-world of pinball Richie Riches.

    Quoted from ForceFlow:

    Also keep in mind that material costs go down per unit when items are ordered in large quantities.
    Also keep in mind, labor costs in the US aren't cheap--wages, plus health insurance, payroll taxes, and a whole host of other things. Then there are licensing costs, development costs, plus all other incidentals that go along with bringing a product to market. Plus, there are facility costs, property taxes, utilities, insurance, legal costs, patent costs, etc.
    A lot more goes into the price of a manufactured item beyond just the BOM.

    So the laborers at Stern are living way too extravagantly on their $9.00/hr.? It would only take them a third of a year to make enough money to buy a machine that they build if they put every dollar they made toward a machine.

    #24 2 years ago
    Quoted from usandthem:

    So the laborers at Stern are living way too extravagantly on their $9.00/hr.?

    That's not what he meant by labor being expensive. Labor is usually one of the top expenses on a companies income statement, no matter what they are in business for.

    #25 2 years ago

    I'm guessing between 30 to 35 percent to the public and 25 to 30 from Stern

    #26 2 years ago
    Quoted from usandthem:

    While we don't know the exact numbers, it's safe to say that profit per machine is up, up, up. Pros are higher than ever and the "real" version of the game, the premium, is now at least 75% more more than a $3800 shipped fully featured SM in '07.
    This is only sustainable in the micro-world of pinball Richie Riches.

    So the laborers at Stern are living way too extravagantly on their $9.00/hr.? It would only take them a third of a year to make enough money to buy a machine that they build if they put every dollar they made toward a machine.

    well stern has more then 50 people so if they work more then 30 hours then they must get health insurance

    #27 2 years ago
    Quoted from chuckwurt:

    That's not what he meant by labor being expensive. Labor is usually one of the top expenses on a companies income statement, no matter what they are in business for.

    I understand that. It's the cost of doing business in a first-world country, especially if you have any interest in keeping it that way.

    #28 2 years ago

    - deleted by moderator -

    #29 2 years ago

    This feels like a trivial question. I am sure the margins aren't as large as you seem to think. And if Gary or any of the other manufacture's are making double digit margins, all the better for pinball in general...

    #30 2 years ago
    Quoted from usandthem:

    I understand that. It's the cost of doing business in a first-world country, especially if you have any interest in keeping it that way.

    That is not economically correct.

    When labor costs start exceeding the value/benefit to a company, the company will adapt.

    https://www.linkedin.com/jobs2/view/104858655?trk=biz-overview-job-post

    80+ full time workers and 80 temporary agency production workers. Looks like Stern is adapting.

    #31 2 years ago
    Quoted from CCary:

    This feels like a trivial question. I am sure the margins aren't as large as you seem to think. And if Gary or any of the other manufacture's are making double digit margins, all the better for pinball in general...

    Manufacturers can't survive on margins under 10% (unless it's something like houses or cars). Stern's margins should come in around 30%. They are producing a product, when tough times hit, they need to be able to absorb the costs of selling less product at a higher cost.

    #32 2 years ago

    Obviously, they are doing well right now. I emailed Stern inquiring about a distributor opportunity. I never got an email back. I have qualified locations available in Indiana, Michigan, and Florida. They obviously already have more business than they can handle. I applaud them for this.

    #33 2 years ago

    Lets breakdown the math and come up with a rough starting point just for fun. The ad says 80 full time people and 80 part time along with max capacity of 75 games per day. I believe the ad had some sales fluff in it and for example's sake I used 30 games per day. This isn't my industry or profession, so go easy on me, just wanted to start the business model and see how it works out.

    -80 full time people(based on the Linked In ad) at roughly $45,000 per year average including benefits(health care, payroll taxes, etc)
    -This gives us 3,600,000 annually for full time payroll or $300,000 per month
    -Rent-I'm guessing here, but lets say they pay a $50,000 rent factor per month
    -30 Games per day average assuming 20 days production per month=600 games per month.
    -Part time labor-$11/hour times 80 people 20 hours per week=76,266 monthly cost

    Labor only =$426,266 or $710 per game(this is assuming 100 percent efficiency which probably never happens), parts delays would add to labor costs substantially. This would be the slow bleed to bankruptcy in the manufacturing business I would think.

    Parts cost= -$2800-$3600 Pro vs Premium

    So this gives us a rough cost of:

    $2800+$710 labor=$3510..00x 25% margin(on the pro) =$4387.50
    $3600+$710 labor=$4310. x 40% margin (on the premium)=$6010.00

    Maybe labor is higher and parts are lower(not my industry) and this is just for fun. I didn't do the LE, but obviously this would be the highest margin by example.

    #34 2 years ago
    Quoted from glasairpilot:

    I emailed Stern inquiring about a distributor opportunity.

    You need to call.

    LTG : )

    #35 2 years ago
    Quoted from sparechange1974:

    Lets breakdown the math and come up with a rough starting point just for fun. The ad says 80 full time people and 80 part time along with max capacity of 75 games per day. I believe the ad had some sales fluff in it and for example's sake I used 30 games per day. This isn't my industry or profession, so go easy on me, just wanted to start the business model and see how it works out.
    -80 full time people(based on the Linked In ad) at roughly $45,000 per year average including benefits(health care, payroll taxes, etc)
    -This gives us 3,600,000 annually for full time payroll or $300,000 per month
    -Rent-I'm guessing here, but lets say they pay a $50,000 rent factor per month
    -30 Games per day average assuming 20 days production per month=600 games per month.
    -Part time labor-$11/hour times 80 people 20 hours per week=76,266 monthly cost
    Labor only =$426,266 or $710 per game(this is assuming 100 percent efficiency which probably never happens), parts delays would add to labor costs substantially. This would be the slow bleed to bankruptcy in the manufacturing business I would think.
    Parts cost= -$2800-$3600 Pro vs Premium
    So this gives us a rough cost of:
    $2800+$710 labor=$3510..00x 25% margin(on the pro) =$4387.50
    $3600+$710 labor=$4310. x 40% margin (on the premium)=$6010.00
    Maybe labor is higher and parts are lower(not my industry) and this is just for fun. I didn't do the LE, but obviously this would be the highest margin by example.

    How does making a bunch of numbers up equal a "rough starting point?"

    There is no better kept mystery in pinball than what a pinball machine costs to make. It's a pastime here to make rough guesses but they are all useless.

    #36 2 years ago

    maybe you could take preorders for new pins you want to make and figure it out?

    #37 2 years ago

    call around to the distributors. get price quotes for the latest pin. From your lowest quote, subtract appr. $500. That is the cost of the machine to the distributor.

    No, this is not verifiable in any way shape or form. No, no one ever told me this.

    As I have read on pinside. There is only so much money in the room. Putting more machines in does not increase your take, just spreads it out. I would imagine it would be the same for pinball machine sales.

    How much is stern making? I have no idea.

    #38 2 years ago
    Quoted from sparechange1974:

    Lets breakdown the math and come up with a rough starting point just for fun. The ad says 80 full time people and 80 part time along with max capacity of 75 games per day. I believe the ad had some sales fluff in it and for example's sake I used 30 games per day. This isn't my industry or profession, so go easy on me, just wanted to start the business model and see how it works out.
    -80 full time people(based on the Linked In ad) at roughly $45,000 per year average including benefits(health care, payroll taxes, etc)
    -This gives us 3,600,000 annually for full time payroll or $300,000 per month
    -Rent-I'm guessing here, but lets say they pay a $50,000 rent factor per month
    -30 Games per day average assuming 20 days production per month=600 games per month.
    -Part time labor-$11/hour times 80 people 20 hours per week=76,266 monthly cost
    Labor only =$426,266 or $710 per game(this is assuming 100 percent efficiency which probably never happens), parts delays would add to labor costs substantially. This would be the slow bleed to bankruptcy in the manufacturing business I would think.
    Parts cost= -$2800-$3600 Pro vs Premium
    So this gives us a rough cost of:
    $2800+$710 labor=$3510..00x 25% margin(on the pro) =$4387.50
    $3600+$710 labor=$4310. x 40% margin (on the premium)=$6010.00
    Maybe labor is higher and parts are lower(not my industry) and this is just for fun. I didn't do the LE, but obviously this would be the highest margin by example.

    I cld see the numbers being around that .

    #39 2 years ago

    When you have an MSRP of $7500 for a premium and your able to simply call a distributor and work that number down to $6800, or in some cases $6600 and then have the pin shipped to your front door for FREE then it make me wonder. So say shipping is $300, now that is a total of $1200 knocked off right there. The distributor is still making money so there getting them in for a lot less then $6300. For all the people that keep saying car dealerships don't release the cost of a car, they do. It's called dealer cost - 30% which is what there purchasing the car for. The manufacture always marks the msrp at 50% over what it costs them to build.

    #40 2 years ago

    Not sure how much a machine costs to make, but I think there's a pretty good chance distributors are making about $600 on machines sold at a good price and A LOT more on machines that a customer pays full MSRP.

    #41 2 years ago

    The distribution cartel is a carefully guarded and protected mafioso type operation that strictly prohibits and forbids any aspiring entrepreneur from getting anywhere close to their territory, bottom line, routes, info and secrets as they are merely all just consumers to them and their ever growing estates, bank accounts and personal collections.

    -1
    #42 2 years ago
    Quoted from 27dnast:

    Not sure how much a machine costs to make, but I think there's a pretty good chance distributors are making about $600 on machines sold at a good price and A LOT more on machines that a customer pays full MSRP.

    I believe a machine that lists for an MSRP of $7500 is costing $2000 to make. They then sell the machine to the distributor for $5000, which leaves a minimum of $1500 profit for the distributor if he lowballs the deal and sell it to you for $6500. I spoke to some dealers who refuse to even sell less then MSRP, so their even making more, upwards of $2500 profit. Yes, the pins are fun and great entertainment but in my opinion they are being sold way to high.

    #43 2 years ago

    Pins cost more than $2k to make

    Last price I saw was $4750 to distributors

    Bill of material cost at Williams was not to exceed $2200 not including labour to assy, admin etc

    #44 2 years ago

    The same Stern executive that told me that Luci and Tron LE are going to be remade next month also happened to tell me that the profit margin on thier machines is about 100%.

    #45 2 years ago

    I think I'm going to use one of my new favorite quotes here. "There are miles between perception and reality."

    Sure, there is profit involved, but these men are not fat cats burning hundreds to light cigars. I had a nice visit at the show with Marc(0) and Trent at the Texas show. That's the largest seller of parts and largest distributor of games in the USA. While my impressions from a short visit does not equal inside information about profit margins, neither gave the impression that they are killing it like Wall Street CEOs. Both of them built businesses by hard work for many years. Those business don't run themselves without them. My overall impression after 5 years of meeting people and talking to various levels of industry members is that everyone is making a living and glad to be doing it.

    I wish games were not this expensive, but I'm very happy to see so many good games rolling off the line.

    #46 2 years ago

    For me it goes back to how Stern is the only company making Pro priced games, if there was that much profit, then competitors would be using that to create competitive inroads.

    #47 2 years ago
    Quoted from dmbjunky:

    . . . Car manufacturers and dealers don't publish their profits either. Cargument for the win!

    Quoted from TomGWI:

    When you buy a car, do you ask the dealership how much it costs to make a car? Do you call the plant it is made at?

    Not a good argument. Anyone can look up the dealership costs on vehicles. Hold backs and selling incentives are another thing.
    Don't get me wrong, I totally understand these pinball manufactures need to make a profit. Its the only way to survive, but why do people get upset when someone asks the price of a machine publicly?
    Hey, let the vendors list their selling price here. Stern has set a new unilateral pricing policy now, so if one dealer wants to ask more than the others, why shouldn't we all be aware of it. We can pick and choose who we want to buy it from.

    #48 2 years ago
    Quoted from Jasontaps:

    Not a good argument. Anyone can look up the dealership costs on vehicles. Hold backs and selling incentives are another thing.
    Don't get me wrong, I totally understand these pinball manufactures need to make a profit. Its the only way to survive, but why do people get upset when someone asks the price of a machine publicly?
    Hey, let the vendors list their selling price here. Stern has set a new unilateral pricing policy now, so if one dealer wants to ask more than the others, why shouldn't we all be aware of it. We can pick and choose who we want to buy it from.

    Stern doesn't want their prices from distributors in written form, they want it to be verbal. Stern holds all the cards. If I were a distributor, I wouldn't risk losing my distribution rights from Stern.

    #49 2 years ago

    Some of you guys are crazy.......At max the margins are 30-50% blended from Stern. My guess is they have only achieved these margin rates in recent years with all of the cost cutting, not to mention the success they have had selling certain games. A business like this has huge overhead, which few of you have mentioned. Just think of the R&D alone behind the Spike system and the losses they had with "The pin" and certain other games. Stern wins big when they hit it out if the park with a game and can produce it for two years plus......maximum efficiency is achieved. I would say they achieved this with IM, TRON, ACDC, ST, MET, TWD. These most recent runs have pushed their margins up. My take is dealers are not clearing much on pins, a few hundred ($400-$600) at most given the pricing we pay......which is not MSRP.

    #50 2 years ago
    Quoted from Trekkie1978:

    Stern doesn't want their prices from distributors in written form, they want it to be verbal. Stern holds all the cards. If I were a distributor, I wouldn't risk losing my distribution rights from Stern.

    I agree, I would what I was told not to loose my distributorship as well.
    I just don't understand all the secrecy.

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