No. It’s not easy at all.

That being said I say a premium stern costs them around 4k

After the cost of all the parts and materials there's all the other business expenses: labor & staffing, development costs, building/facility/utility costs, insurance, payroll taxes, property taxes, and so on.

There probably isn't a whole lot of meat left on the bone when you figure all that into it. So I think the material cost per game might be lower than that.

the general public would not have a clue
that bracket you bought from Marco for $20.00, probably cost stern $1.50
displays that cost you and me $200, they probably pay $20
buying in bulk by the 1000's saves a lot of money

You need to account for the cost of staying in business... I don’t think stern is building a giant war chest with all the profits they are taking in...

The cost of the parts alone is irrelevant... what is the point of asking that question? Are you trying to weigh buying from stern vs designing and building a machine yourself?

The cost of the parts will be a very closely guarded secret at Stern (as would be the case with most manufacturing operations) so anybody who could actually answer the question would never do it. In that regard there is no point in asking the question. However, I think it is something we would all like to know.

I think your post is great and it's not irrelevant. I'd add two things.

The first is I think everyone would agree stern pays at least half of what us as individuals can buy parts at a retailer for. So if someone put together a list of all the parts needed for a typical stern and it came to $6000 for example, sterns cost is at least half that for parts alone.

The second is consider what stern games used to cost in the late 2000's. They made enough to stay in business then, so you know a large portion of the increase since then is profit

You neex to find out who the accountant is and sway them to tell you...

Hire Eliot Ness?

For sure he would get it done.!

I remember some controversy when a guest released a number on Kaneda. Must have been accurate as they made him pull the episode and/or delete that part. I wanna say it was a Stern employee maybe? I didn't hear it but I do remember the drama around it. I also vaguely remember 2 or 3 thousand being mentioned, but I could be wrong.

Pointless to separate Bom from everything else. It's likely 2.5k for a pro after all the cost cutting. For example, their new cheap, Chinese power sources cost then probably around 15 bucks. They save huge on wire and pretty much every part in the game.

Cost of coding has probably gone up 10x though.

Reminds me of a guy who went into a Cadillac dealership. After asking the sticker price the customer replied that’s too much. The dealer responded, can you build one cheaper?

The world was quite different 15-20 years ago. You're forgetting about 15-20 years of inflation and the increase in expenses, taxes, insurance, utilities, wages, etc.

I would be very surprised it a pro costs them more than 2.5K. As mentioned before the misc parts are pretty cheap, the high ticket item would probably be the cabinet and assembly.

I listen to a pod with some ex Midway video game guys (Team GFB Radio). They worked with George Gomez when he was making video games like NBA Ballers. Anyhow, on one episode they randomly mentioned Gomez hooking a friend up with a Simpsons Pinball Party at direct cost which was about $3,300 at the time.

So a $4,000 BOM on a Stern premium including the game development, parts, labor, overhead, inflation, etc... seems like reasonable guess

Star Wars Pin is probably more like a $2,500 BOM

And also just how much Stern has been staffing up. Now they have multiple creative teams making a lot of content that they used to not do. So much more music and the LCD is a massive increase in resources to make it look good.

You guys are just making up numbers. Why is it so important to figure out what Stern pays for a bracket or foot of cable? What's the point? Even if you got to a number for just parts it's completely meaningless. Before you buy parts you need a whole staff to design the pin, build prototypes, develop code, setup orders for assembly, train assemblers, etc. Of course to house the staff you need a building with rent, utilities, taxes, insurance, etc. Costs obviously change over time. Maybe some parts get cheaper but labor or taxes go up. Even if you make up a number like $2500 for a pro, what good is that number? Does that make you think Stern should sell the pro for $2501?

If new pinball machines were cheap to make and very profitable, there would be a lot more companies making them.

I have often wondered what the profit margins are at Stern.

Not because I dispute the price, but because they can’t be making much.

Huge cost increases can be attributed to the whole building of designers, animators and programmers now that there are these LCD screens.

Technology has shaved the price of board components and made the electronics more modular, reducing assembly time.

Licenses are expensive. Stern is not doing low-end licenses.

Blah blah blah. Let’s say it’s a push.

Let’s pretend the a $6000 pro, out the door and on a truck to a distributor costs stern, from design to marketing to engineering to packaging, $3000.

So they sell to Cointaker, Marco, Yo Grammy’s Pinball Haus, etc for $4500 (making that up).

Who then will bring it to my curb, delivery included, for $5800 - making $1300 minus cost of operation.

Let’s pretend those are ball parks. $1500 a game? How many do they sell? 100k?

1.5 mil profit. That seems like very little. 50% return if sales are good. A strike, a massive recall, a shelved game could erode that considerably.

Parts? It’s the value of the intellectual property (patents, design) and tooling necessary to stamp out those bat wings.

I really want an Avengers. How much is my divorce gonna cost.
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I would not be surprised if that is what some people think. But I'm pretty sure those never ran a buisness and had to be profitable.

I'm glad there are still manufacturers like stern and others that can make a pinballbuisness survive nowadays. Actually I'm amazed that there is a market for multiple new games a year.

Your math is off by a factor of 100

But Stern makes maybe 12,000 units a year. If it was a $1,500 profit per unit then that is $18m profit per year. But I don't know if they're really making that much per unit. Some of their toppers and accessories have huge markups. That's where they are really lining their pockets.

I'm pretty sure it was the Nic Parks (The Pinball Company) interview where he was talking about getting Spooky to build Jetsons at a certain BOM. He mentioned a Stern Pro cost like ~$4,200 to him as a distributor. But I have no idea if Stern charges a standard rate or cuts deals with bigger movers.

Everyone is always so focused on the BOM, but rarely does overhead get mentioned.

Distributor cost might have been $4200 back in 2016 when Jetsons was made.-back then street prices were $4600-$4800. I don't think distributor margins are as high as people here think. I do know that higher volume distributors get better pricing than low volume ones do. I still think even high volume distributors are likely paying over $5K for Pro's now. low volume is probably closer to $5500 if I had to guess. I doubt Stern is making more than $1000 off of Pro's when you factor in overhead. I think where they make their money is on Premiums and LE's. BOM on a Premium is likely only a few hundred more than a Pro, yet they sell for $1600 more. LE BOM is likely only a few hundred above that. I would venture to guess that the BOM difference between a Pro and LE is less than $700, yet they sell for $3K more.

I think here is the easiest way to look at it:

I'm going to guess the "net profit margin" is anywhere from 5-10% on a PRO model

And then i would say 10-12% on a PREMIUM model and 15-18% on an LE model.

Let's assume with normal operating conditions they are producing 60 pins a day over a 260 day work calendar year ish. That's 15,600 pins. I know that's in the ball park and might be higher now?

LE models per year roughly 2,000 units on 4 titles = $9,200 x 15% = $1,380 per pin or $2,760,000

Premium models per year 5,000 units total = $7,600 x 10% = $760 per pin or $3,800,000

Pro models per year 8,600 units total = $5,800 x 5% = $290 per pin or $2,494,000

That's a TOTAL "net profit" AFTER all expenses of $9,054,000

And that does NOT include accessories and other ancillary income

Thus, i'm assuming the ACTUAL % "net profit margins" are probably LESS than the above numbers

This gives us at least a starting point to play around with.

This is why Stern has to keep the line moving!!!

The person was a distributor and he said they "distributors" paid $4,300 to $4,400 that gave them a $1,000 profit at the time

Also I was reminded of seeing a random Todd Tuckey video where he threw shade to distributors that only sell new in box games. "The game sells itself, needs no work, and you make an easy thousand dollars". He might have just rounded to an even thousand dollars, but it's probably not that far off.

I would say a good guess is they are doing at least a 100% markup. If not they would probably not be making much money. So a pro probably cost them about $2500 to mass produce.

Oooh a lets all pull numbers out our asses thread.

I can tell you as someone who has run a business for 12 years

1. the BOM is way more then you think it is.

2. Unless you yourself has run a business for years your opinion on this topic doesnt mean much of anything. About the same as me not being a doctor and telling you what that lump in your neck is.

The main reason tons of new businesses fail within 6 months (restaurants, bars, arcades on and on) is the owners way underestimate the costs to keep the doors open.

Pinball is a high volume lower margin business.. they need to move product and "keep the line moving" to stay afloat as someone else has said.

I agree with the first three statements, but I wouldn't consider pinball manufacturing a "high volume" endeavor. And what is "low margin"? Is 30% low; Is 60% low? How about 100%? I guess "high" and "low" are dependent on the frame of reference.

By high volume I mean they have to move units to keep things on track..... they arent making tons off each unit so they have to sell a bunch in other words.

They do have this pretty well balanced with the way they run games.. they do them in batches when demand is there and try not to get ahead of themselves.

I think iceman44 had a good educated guess a few posts up. Probably on the high side.

People who think they are making 30% or more after expenses etc are off their rocker

I think your net profit margins on individual machines are probably close to the mark. However I seriously doubt they are producing 60 pins/day. That would be 1 pin every 8 mins. This is not an automated assembly line or 10,000 employees. I don't think they could even load them up on trucks fast enough to keep up with production - remember most distribs don't buy them 60 at a time.. which means many trucks with smaller loads. Shipping is an important consideration given the size of these things. Storing hundreds of machines would not be not smart business. I think that ~20 machines per line per day is more likely. They have 2 assembly lines and they don't always have both up and running. At 20/day it would take about 4.5 weeks (25 business days) to produce 500 LEs. Seems about right.

LOL. well whoop di doo. 12 entire years? get the F out coming in here with your I know everything BS while bashing everyone else's theories. Well I have way more than 12 years and it is actually in manufacturing, so does that make my theory any less correct than yours?

Not bashing anyone.... I am giving an opinion.

as for your theory that would depend on what you manufacture.

If 100% was accurate there would be 500 pinball companies by now... hell I'd open one if I could clear 100%.

Nah, Stern does average like 50 a day and has a capacity of 100 a day if everything is running perfect. They have around 300 people building and packing those games (pre-covid at least). Stern is very proud of how many games they can make when things are moving smoothly. Just go on the Stern Factory tour or watch a video of it. You can see the area where they store built games as they wait for demand to fill shipping containers, because smaller shipments are so expensive.

I heard they did their entire run of Primus games in one day.

Surely they laugh every time someone complains that a quick one-off run of contract games is somehow "slowing down the line" on the stuff everybody here actually wants.

This.

5-15% at most Net profit on pins.

Payroll at stern has to be in millions of dollars alone.

This is such a unique industry that I think Experience , manufacturing know how, logistics and supply chain go along way.
With the cost of materials going up due to lack of cheap raw materials and logistic slow downs things are becoming much more difficult.

So while the Parts & Raw Materials may be easy to calculate. The difficulty comes in calculating the cost of licenses, payroll & benefits,
manufacturing and marketing. I'd think materials would be the less than you probably think. The intellectual property is a huge part of that cost.
R&D and all that & repeatable process.

Sometimes I think stern is missing the. boat on a couple power plays they could make. They should license out their boards and invite 3rd party folks to modify & improve that tech.

These threads seem to all come down to Gross vs Net margins.
If you just part out a BOM and compare that to what a distributor changes you are getting gross margin. And that is always going to make it look like Stern is rolling in dough. (The gravy is on the LE where the BOM difference is probably $500 if that.) Once you factor in the distributors cut, and the operating costs of the business you can get to net margin. Due to the relatively low volume of the business, they need the high gross margin to cover all the costs to get a reasonable net profit.

The gap between BOM and sale price always looks high because most people undervalue their own time in building a garage game from top to bottom. Labor, from top to bottom (design, code, art, manufacturing, marketing, tech support) is big portion of the cost of a pin. And don't forget licensing costs.

Also yeah, it might only cost Stern $1.25 to bulk order brackets from a manufacturer - thats because the parts manufacturer doesn't need to eat any [of Sterns] design/operating costs, they just take a part plan from Stern and stamp it out. What you see on Marco is the same relative markup Stern needs, plus the (large) markup Marco needs to keep parts on a shelf for years until someone needs it.

Do I wish pins cost less, you bet I do. But LE's still sell out, so Stern is still clearly setting the price point the market will take.

They were producing 12,000+ pins a few years ago. That was confirmed. And based on various statements by Gomez and others that number has significantly increased.

They are def in that 15k range and above now.

I'm thinking maybe my NET PROFIT MARGINS might be a tad too high but i bet it's close!

That includes all costs including distributor fee.

There so much huge profit in pinball that Williams bailed out to make slot machines.

We are talking 20 plus years later. Operators were going by the wayside. HUO exploded over the last 8-10 years since JJP Woz.

Like i said, i think my net profit margins are a little bit too high but these people that think margins are 40-50% plus don't understand math!

5-15% depending on the model. And that depends on getting efficiencies on that volume as well. The more they can produce, the cheaper they are to make by spreading that fixed overhead out over a bigger volume of pins.

Stern has perfected the process right now it seems. Good for them.

I agree with you...their overheard is crazy high.

The OP was referring to just parts and BOM but I am not sure how that matters in the grand scheme of things.

A pile of parts is just that...

Can;t we just get some threads on how the top 100 is bunk?

‍(facepalm)

I really wish Stern would raise their BOM by $0.16 cents to produce better quality flipper coil brackets.