Last blog post, I talked about OpenBeam joining the Open Source Hardware Association, and that changes are coming. In this blog post I'd like to address some of the fairly harsh criticisms of OpenBeam popping up online, and how we are addressing them. "Why does shipping three pieces of aluminum costs as much as the aluminum itself?"
The fact is, shipping is expensive, for a small business starting out. Companies such as Amazon and McMaster spend hundreds of thousands of dollars every year on freight and enjoy very high (probably over 50%) discount on shipping as a result. They buy shipping material in bulk, and they can afford to pay a shipping clerk or 10 slightly above minimum wage full time to have them package orders all day long.
On the other hand, shipping for OpenBeam can only be described as a "financial blood bath". It had wiped out a $12,000+ budget surplus - and that was just for Kickstarter rewards. We view this as a necessary evil as part of building a business. We are fortunate to be able to have rate negotiations with FedEx, but it is still more expensive than I'd like. (The reason why we don't use USPS, except absolutely necessary for Hawaii and Alaska is because even with the surcharges for residential delivery, Fedex is still cheaper due to the large package surcharges for US Postal Service Priority Mail). In Canada, we have the extra problem of a tube surcharge. As cool as the shipping tubes look, they are becoming more and more of a liability. (If someone can point me at a way to unload the remaining 1000 shipping tubes in my inventory for minimal loss, I'm game).
So, what are we doing about our shipping costs?
* Our webstore software currently assumes that all orders ship with extrusions, and assumes a 44" shipping tube for packaging. At the beginning of the webstore launch this was true. We are now looking at ways to get around the software's restriction. In the meantime, we actually issue shipping refunds for cases where the shipping charges we collected exceeds the actual shipping charges.
* We are expanding our distributor network. We are actively targeting hackerspaces around the country, and we have, at launch, structured the pricing such that there is room for a dealer to make a profit. So, if you are running a hackerspace / makerspace with regular hours, please send me an email.
* We are in the process of revamping our packaging to make it more retail-friendly (Bar codes, tags, hanging features for shelves). This will allow us to start using fulfillment partners such as Fulfillment By Amazon (and thus qualify for free two day shipping for households with Amazon Prime), and allow us to start selling in other retail channels.
* We have partnered up with the folks at MicroRAX for doing pre-cut aluminum pieces. Precutting solves two problems: It eliminates one of the biggest hurdle people have with having to cut their OpenBeam to useable lengths, and it allows me to start enjoying lower volumetric rates. Fairly soon, we'll be able to offer OpenBeam in flat rate shipping boxes. This is an exciting move in the right direction, especially for our international customers.
"The open channel in OpenBeam compromises structural rigidity"
In theory, this is true, but in practice, over the lengths that OpenBeam is used for, we don't really see the effect of opening the extrusion. That being said, this was driven by cost of manufacturing. For our initial manufacturing projections, having the profile open made the beam 2/3 cheaper. Increasing the product cost by a factor of three, early on in the game would have killed off the competitiveness of OpenBeam.
Now that we buy OpenBeam at multiple kilometers at a time, our extrusion mill is more willing to work with us on the cost of running the part on a precision press. As a result, we are able to offer the beam with a closed profile without any price increase, and we have already launched a new extrusion die for the next shipment of metal to have a closed profile.
We get it that customer perception is important, and we are happy to say that we can address this one early on. For those of you who had already purchased OpenBeam, thank you, and please note that your extrusions are just fine. We will cut over to the new extrusion when we run out of stock on the old ones.
"OpenBeam is expensive!"
Let me address this point from a few angles.
We priced OpenBeam in such a way that we can have dealers. We consider our dealers to be a part of the OpenBeam family that's vital to our success long term. We ABSOLUTELY REFUSE to undercut our own dealers to make a sale. When you buy OpenBeam, the extra cost goes into paying for things like educational outreach, educational discounts and discussion forums. OpenBeam is also an active contributor to Thingiverse. Compared to 80/20 and Bosch, we match their pricing at $10.00 / meter sale to the end user. We have a great kit builder pricing program for folks doing 3D printer kits - we offer them dealer pricing so that they can make some money when selling their completed 3D printer kit.
Secondly, we offer the lowest bracket / accessory cost on the market for an extruded aluminum system. We use standard M3 nuts instead of proprietary nut plates. We worked hard to lower the cost of the brackets so that they are affordable for large builds. We are the only system that I know of that comes with NEMA 17 stepper motor mounts, bearing mounts, and servo mounts, and linear bearing mounts. This makes OpenBeam very attractive for machine building.
Most people, when they price out a 3D Printer build, fail to account for their machine time. When a part costs $5.00 in filament and 3 hours to print, it's not a $5.00 part - it's a $5.00 part, plus the cost of 3 hours of your machine time / machine wear and tear. When you think of it this way, OpenBeam becomes a much more competitive financially.
We are a young company. A short six months ago, OpenBeam was just an idea. In six months, we've managed to launch and successfully close a Kickstarter campaign, fulfill our rewards, open a webstore. We are currently deployed on 4 continents, with distributorships to follow. We are aware of our shortcomings and we are working actively to fixing them.
For those of you who have supported us so far, thank you. You are the ones who have made this dream possible, and we look forward to being an active contributor to the open source hardware ecosystem. For those of you on the fence, we have great "Hello World" beginner projects on our web store now, to make it easy for you to try building with OpenBeam.
Thanks for reading,
-=- Terence, Rachel and the furry monster puppy.