Re:USB 4 version 2 promises 80 Gbps speeds over existing cables
by patrec on Thursday September 01, 2022 @11:48PM
(#32686374)
These numbers make no sense to me. If you typically have 1900% gross profit margins on USB cables, why isn't everyone making USB cables?
Re:USB 4 version 2 promises 80 Gbps speeds over existing cables
by rcxdude on Friday September 02, 2022 @06:24AM
(#32688975)
This isn't a super unusual markup. There's a huge amount of other costs which bring the overall margin down (e.g. even if you just looked at the markup retailers use you'd think everyone should be in retail or trying to bypass them, until you look into the cost of warehousing, warranty returns, unsold product, 'shrinkage', etc).
Re:USB 4 version 2 promises 80 Gbps speeds over existing cables
by rexf on Friday September 02, 2022 @01:52AM
(#32687072)
There are countless companies making USB/similar cables. They are a commodity and it's hard for them to stand out.
So I use brand (Anker, amazon basics, Apple, etc) and store (amazon.com, best buy, target, etc) to narrow down the countless cable options.
Re:USB 4 version 2 promises 80 Gbps speeds over existing cables
by unnah on Friday September 02, 2022 @03:29AM
(#32687705)
Those numbers are marginal costs only, the manufacturers also have substantial fixed costs. Anyhow, there already are lots and lots of USB cable brands, although I suppose many of them are just rebranding bulk cable products.
For a typical cable, it's probably around $0.30 to $0.50 to make, and they tend to sell between $5 and $15, depending on the spec.
For simplicity's sake, we'll assume $0.50 cables that sell for $10. Now, if you save $0.01 in manufacturing, so the cost is now $0.49, and if you sell say 100k cables (feels like a believable amount) then you've saved a cool $1000 in making them. So your profits are $1000 larger now, and you can pat yourself on the back. Good job!
The kicker then is how those profits can be used to make MORE cables. And $1000 of extra profits means $1000 of extra cables. Just over 2000 more, in fact, which you can also sell for $10 each.
Those extra 2000 cables have now earned you a cool $20k of profit ALONE, from only $1000 saved dollars, which itself was from only a single saved cent! Amazing job!
If you keep repeating this, you can probably start to see how this begins to run away:
Even starting with only $1 to make $0.49 cables, you end up earning over $1M on your 19th batch, even if you were spending only 10% of your sales to make new batches of cables and pocketing the other 90%! You actually pocket $1.5M on that batch, and then only spend $167k on the next batch, which promises to earn you even more!
Meanwhile, your competitor making $0.50 cables, starting with a similar $1 and 10% to new batches scheme, would only get to pocket $1.1M on their 19th batch! That $400k is a pretty tidy bonus you've earned.
On your 20th batch, you're selling 80k cables, but your competitor can only afford to sell $60k. We've not even reached the 100k a batch mark, let alone a million cables, and you're already way ahead.
And that's compound interest, folks! From $1, saving only a single cent, we can earn $400k more than we would have otherwise. Outstanding.
EDIT: I took so long to write this that I see andrewstuart2 has summed up the first half of the story far more concisely than I. Nicely done! I feel that compound interest is important for seeing the bigger picture of profit over time, so I'll keep this comment as is.