What are some tricks to make pedals at a quicker and more efficient rate?
Did you have luck using some of the new tools of the trade? (SMT, Powdercoating)?
Does anyone on here make a living on stompboxes? I know a few friends who have.
Workflow.
:icon_biggrin:
It's a brutal business. There have been posts here and in its precursor for the last couple of decades discussing how really difficult it is to support yourself building pedals. I suspect that improving your workflow won't get you there.
You might want to do a little math first.
1. How much money do you need to make selling pedals? That's actual, cash-in-your-pocket that you can spend.
2. How much money do you need to make before taxes to be able to spend that money without the feds and the state and the county and the city coming and taking other things away from you?
3. How much will you spend on overhead? You're going to pay something for electricity, heating and cooling, storage, insurance, office supplies, telecommunications, rent, and about 10,000 other things. That all goes into the cost of each pedal.
3. How much capital do you need to make this thing flow? In this sense, money is a "lubricant", used to order parts, buy supplies, pay rents, pay internet service fees, pay advertising, and so on. Note that this is not the money actually spent on those items, but a fund of cash to be sure you can buy what you have to have *when* you have to have it, and get the money back out at the end of the process to re-lubricate the next batch. A great analogy is the amount of water the human body uses digesting food. This is not the water used for urinary excretion, sweat, and so on. It's just the water that goes into the digestive juices to break stuff down. You use about two gallons of water digesting food each day. You don't see this because the majority of it is re-absorbed in the last little bit of the digestive process to be reused. This item is critical because it directly limits your workflow. You can't make any more pedals than you can order parts for at any one time, to overstate an obvious.
4. What is the fully-discounted cost of each pedal? Pedals are more than a box of parts and some neato soldering. They are a parts list, a process list, a packaging and artwork list, a per-box warranty and support cost, a pro-rated overhead cost, a per-pedal labor cost, a per-pedal inventory cost (it's there whether you think it is or not, like so many of these) and others.
5. What can you sell a pedal for? What you can't do is to add up all these costs, then lump on a comfortable profit, and be happy. There is a maximum price you can sell a pedal for, and probably only one or two sales at that price. If you sell for cheaper, you sell more, and you can actually make more money at a lower price. At some point if you keep lowering the price, you return starts going down again. The price/profit curve is an interesting application of the reasoning the Laffer curve, and one that is critical to small businesses.
6. There is an ill-defined maximum profit price for any pedal (or anything else!) where you get the intersection of best practical profit per pedal times the best practical number of sales. When you find that, you get to divide that profit per pedal into the results of 1 and 2 above and see if the number of pedals you *have* to sell to make a living is more or less than both the maximum profit point pedal quantities, and the number you can fund with your capital.
You're probably way ahead of me on all this. I'm a techie. I learned a lot of this the informal hard way, but a lot of this is common business degree stuff. Sometimes I'm a little bitter - the B-school guys know this stuff already and they didn't even have to learn to do circular integrals in the complex number plane! :icon_lol:
If you want to make an annual salary of $50k, and you sell your basic OD box for 100$, you need to sell 500 of them in a year, meaning you need to build 1.36 per day. If your pedals are particularly fancy and you can get 200$ per, you only need to sell 250 in a year, making 0.68 per day.
First of all, I don't think $50k revenue is worth it. That's not profit... you have to discount your costs: materials and expenses, taxes and the rest.
And do you really have 500 customers per year? There's a lot of competition out there, and the average guitarist doesn't care about custom or boutique... you can get a Berhinger or Dan Electro for 10-20$. You have to spend your time on marketing and branding if you want to get a premium for your boxes, whether by boutique mystique or local word of mouth.
If this becomes a part time affair, when you are not doing your day job, time becomes a premium. A fabbed pcb, onboard pots/jacks, pre-painted/drilled boxes, and a basic waterslide minimizes your build time. Work your pedals 5-10 at a time makes sense... especially for painting / clear-coating. Prepare your wires, tinning and parts sorting in advance.
Lost cause I think. Can make a lot more working at Denny's.
All-pedal.com :icon_lol:
^ just like brewing. time-share manufacturing, i dig it. didn't look into all-pedal much, but seems like it could be a good thing for the right person.
QuoteDoes anyone on here make a living on stompboxes? I know a few friends who have.
What are some tricks to make pedals at a quicker and more efficient rate?
what did your friends say when you asked them? ???
Quote from: R.G. on May 03, 2015, 11:43:54 PM
2. How much money do you need to make before taxes to be able to spend that money without the feds or the state or the county or the city coming and taking other things away from you?
I make a point of thinking twice before arguing with anything R.G says, but I think this is what he meant.
:icon_mrgreen:
I'm a software engineer (that's read a little too much about logic), I don't think I, in my lifetime, will earn as much making pedals as I did during the first few months as a programmer. That won't stop me from selling a few pedals, but I won't ever quit my day job to start building pedals for a living.
OP: What do you do today that makes you want to quit and hack it out as a pedal builder?
Another thing to ask yourself is....
What do I have to offer that will let my product stand out from the pack?
Do I have original designs? or am I going to join the hoard of the so called "Boutique", "Hand wired" crowd.
Why would someone purchase my stompbox over brand X?
QuoteFirst of all, I don't think $50k revenue is worth it. That's not profit...
Right, take what you (personally) want to gross as income, triple it then do the per pedal math to achieve that. Also don't forget that we need a large chunk of our time for running the business all the way down to ordering parts, marketing, warranties, doing the books and about 1000 other unexpected duties and expenses. We have to calculate all that is needed then and that dictates the price of the pedal not the other direction.. However...
By the time one does the math properly they'll see that a "good living" results in a $500 per pedal (or some other ridiculous number) and we are dead in the water due to competition because even lovingly handmade has it's limits. Welcome to the real world. :icon_mrgreen:
I build a 3-7/month @ 200.00-300.00 each. After parts, labor, taxes, business licenses and everything else, I'll be lucky to break even but it's close enough to fund the paid business hobby. IOW, I have a great regular job that allows me to do what little pedal building I do.
"Can make a lot more working at Denny's..."
Quite true, but you CAN have a "regular" job and build pedals part time. In that case, as someone else mentioned, your time spent building, marketing, and selling is what you have to put a value on. If you enjoy doing it, then it can be rewarding, both personally and monetarily.
If I were building to sell, I would first develop a product line of pedals that were in demand or I could identify a market for. If they started to sell, then I'd develop a batch style building process so that I could efficiently fabricate the components, install/box them, test them, and prep them for shipping. I would also develop a web presence for marketing and selling. And if possible, I'd also try to get a "name" artist to endorse my products. The last one would be difficult without a major investment in time, but if you wanted your business to take off it's what you'd have to do (I suppose you could help this along by attending the NAMM tradeshow and similar events - but that would be another investment of time and money).
Good luck. :icon_biggrin:
QuoteI suppose you could help this along by attending the NAMM tradeshow
"Welcome to NAMM, a friendly place for EH to make their demos/you tube ads. Paid for by your booth fees!"
R.G.
Will an effect business need liability insurance if the device has a 9VDC power receptacle?
Who knows what someone might plug into it.
the market is not there - you have to come up with a product and slowly let word of mouth get out to the consumer - its cut throat and people are not spending
it has to be a hobby and everything else will follow - if you make an honest product at an honest price it will come in time
my .02
Quote from: Gus on May 04, 2015, 01:10:24 PM
Will an effect business need liability insurance if the device has a 9VDC power receptacle?
Who knows what someone might plug into it.
I guess it depends on whether you have anything to lose. What happens if a toddler chews the paint off, or eats the battery? Or if the housing crushes, and the sharp edges puncture the bare foot used to stomp it?
In a mature litigious society, any producer of goods that has money to be obtained by judgement *will* be sued. The only question is how soon and whether they are "judgement proof".
QuoteIn a mature litigious society, any producer of goods that has money to be obtained by judgement *will* be sued. The only question is how soon and whether they are "judgement proof".
Pretty much. It isn't about whether you are actually safe, mindful and sound. It's whether you have something that someone else might want; and if you are successful and have a bank account and assets, you do. Suing is more of a source of potential income these days, vs. correction of negligence. Assume when, not if.
I find that building in batches of 10 or more is much more efficient than doing 1 at a time.
As said above, I think batch building is the way to go. I tend to build a pedal in a few hours but given another hour I could probably have built 4 or 5 if they're all the same.
Not that the OP asked for advice on this but I think the market is pretty saturated with little aluminium fuzz boxes with silly names....if you can use your imagination to come up with something a little fresh, even if it's mostly aesthetic, you've got a better chance of carving yourself a place.
Don't forget that if your pedal generates frequencies in excess of 9 KHz, you will need to get FCC certification. Pure analog pedals will be OK but delays and pedals with a CPU in them will require certification. Probably around $1500. Even a DC-DC converter will require this.
In summary: work at Denny's :)
!!
$1500 for certification??
Where can I get it done for that little?
I'm deadly serious. My experience is that it costs much more.
I am sellign pedal at almost cost but word aroudn the big city from craigs list says to get one of mine on the cheap - later in time, and when I have mastered my craft, people will spend a little and I can make a quick buck here and there ..but yes work at anyplace and build effects because you love it and it is what you will do. it will show through in the final product, that is my unique niche :)
I think the money is in amplifiers ..I just seen a hand wired amp go in a local shop for over 10K ..dude probably put it together in 8-10 hours if that ..whoever the engineer on tube city/youtube channel puts those fender and Marchall amps together in what seems a few hours (although edited) ..its so crazy how easy he makes it look..like watching bob ross paint an oil on canvas in 30 minutes.
Seriously good advice from everyone.
1. It's a hobby first and be honest with prices
2. Batch build 10 or more at once
3. Maximize workflow.
4. Come up with new stuff
5. Get toddler battery eating insurance
6. Have fun
>
If you want to make an annual salary of $50k, and you sell your basic OD box for 100$, you need to sell 500 of them in a year,I do not think it is that simple.
Pedal selling for $100 has to have some parts ($$) in it. My experience is that very few buyers will pay much more than the parts cost (in small quantity). And that counting solder-time, keeping parts inventory, putting the WORD OUT, buying-off unhappy customers, you will be very lucky to clear $10 on a $100 sale.
That leads to 5,000 of the $100 pedals to pocket $50,000.
There's not even 5,000 people in my town, maybe only 50 guitarists, maybe just 5 who have $100 to spare. And they don't all hang-out in the same places. So I have to reach-out BROADLY. Yes the interwebs make a global reach easier than ever. These are the best times of our lives. It is still head-down pushing to get the word out and build enough excitement to sell 5,000 pedals ever, much less per year *consistently* in an up/down/down economy.
It is VERY hard to make headway against $49 pedals marked-down to $29 at Guitar Center.
Don't quit your day-job.
________________________________________________________________________
An excellent (if out-dated) book is Don's
Incredible Secret Money Machine$14 dead-tree-- http://www.amazon.com/The-Incredible-Secret-Money-Machine/dp/1882193652
10MB PDF at author's site-- http://www.tinaja.com/ebooks/ismm.pdf
QuoteFirst, you have to be heavily into a technical or craft trip on a total lifestyle basis.
The world has changed yet many of the basics stay the same.
Don is not a musician (but his ideas do apply). However the 1992 edition has this passage:
QuoteOf the thousands of people in the audience, at the most only five realized they were now witnessing a once-in-a-lifetime performance.... To nearly everyone else, it sounded like a bunch of god-awful squawks.
Always play for those five.
I have sold 6 pedals in 7 weeks on craig list to people in my community who reached out and wanted to support me because they all thought it was cool to have a hand built effect by a local guy, the music scene is craving it but it has to be the right price. I averaged 40-50 bucks a box from them.
In this upcoming June, at a local VA park, a really nice facility, they are holding a namm type thingy for locals which is being sponsored by local radio shows and magazines etc . you can get a booth for ten bucks. I will be their for sure!
> averaged 40-50 bucks a box
Gross or net? (Sale price, or price minus parts and fair payment to your workers (you)?)
gross
they only have I bet 20-25 bucks in parts at most in them ..good stuff though like neutrik jacks etc..some mojo here and there.
when all said and done I really made nothing considering all the parts and stuff i waste etc lol
its a hobby is all..if I invent something someday watch out !!
Quote from: PRR on May 05, 2015, 12:07:03 AM
> If you want to make an annual salary of $50k, and you sell your basic OD box for 100$, you need to sell 500 of them in a year,
I do not think it is that simple.
But I think there is a simple way to look at it.
Assuming a one-(wo)man operation working out of your own living space. Labor costs don't figure - you just want to make a living.
If you want to earn $50k a year, then you need to make $50k profit on all your pedal sales. If you can sell 100 pedals a year, you need to make $500 per pedal. They need to be really good pedals, really desirable, so they might cost more in parts etc. to make - ballpark $100. You are trying to sell $600 pedals. Good luck with that.
If you can sell 200 pedals a year, then you need to make $250 per pedal. They still need to be really good, but not necessarily exotic, so they might only cost $50 to make. You are trying to sell $300 pedals. Maybe, but not likely, not right out of the blocks anyway.
If you can sell 500 pedals a year, then you need to make $100 per pedal. If you can get your cost down to $25 per unit and still make a really good pedal, you'll be selling $125 pedals. This is starting to be a very workable plan. 500 pedals a year is 2 pedals a day, 5 days a week, 50 weeks a year. Building them by hand should be no problem at all.
If you can sell 1000 pedals a year at $75 each ($25 cost), you need to make 4 pedals a day - still quite doable. Sell those same pedals for $100 and now you are making $75k a year.
The problem isn't being able to make money
building pedals - it's
selling pedals that is the challenge. No matter what route you try to take, you need a market. That takes time, if you can even make it work. Very many have tried and failed, a few have succeeded.
Do it on the side because you love it first, trying to build up a market. If you get to the point where you have enough demand, then consider going for it. But don't quit your day job.
Respectfully, unless one is planning on dodging laws, taxes, licenses, hidden costs and all non-build duties, everything figures... Additionally, one simply can NOT do the math that way because there is literally no time left to do anything else, not even enough to box, ship, order parts, make and take payments and paperwork, warranties, refunds, repairs and then .... the unexpected. It doesn't cover the bases and only serves to inflate success that isn't there only to be a disappointment (called going out of business and/or being carted off by the tax man) later.
As I eluded earlier, one doesn't simply multiply "pedals I can make per day by some price". They must accurately figure ALL costs most of which are completely beyond parts and labor and/or hidden then do that math that predicts the price number of pedals needed to exceed that. Back in the day that was called "You need to back into those numbers". :) In other parlance, it's called a business plan. Not to be argumentative but it's the biggest mistake I see being made anytime someone who has no real business experience considers starting a business. At first glance it seems like the perfect method but it isn't.
Quote from: GGBB on May 05, 2015, 11:24:37 AM
500 pedals a year is 2 pedals a day, 5 days a week, 50 weeks a year. Building them by hand should be no problem at all.
Two pedals a day, start to finish? That's achievable, with good discipline. Although you have to use quick-dry paint. :icon_lol:
It's probably not achievable if you make your own PCBs, and probably not achievable with vero or perfboard at all.
QuoteIf you can sell 1000 pedals a year ... you need to make 4 pedals a day - still quite doable.
IMHO, this isn't doable without going to batch techniques: spend one day drilling a lot of boxes; paint a lot of boxes; stuff and solder a lot of PCBs; cut a lot of premeasured wires; wire a lot of controls and switches; solder a lot of controls to PCBs; insert a bunch of PCBs into (paint-now-dry) boxes; test a lot of pedals for function; fix the few that don't work; package a lot of pedals into bags, boxes, etc.; maintain your email and web site, process orders, design new pedals, eat, sleep, buy groceries...
Somewhere along the way, I personally would go stark raving mad at doing that same stuff over and over, day in and day out, without even any prospect of it getting better. I'd begin feeling like a slave to myself once the novelty wore off.
QuoteThe problem isn't being able to make money building pedals - it's selling pedals that is the challenge. No matter what route you try to take, you need a market. That takes time, if you can even make it work. Very many have tried and failed, a few have succeeded.
Great encapsulation of the problem. Any time you get past the fun, exciting point of being able to sell something you've made, it begins to become just another sales job. There are easier and more rewarding sales jobs that don't require you to build all of the underpinnings and structure of a business while you're doing it.
If you're making any quantity of the same pedal then you're probably better off out sourcing at least some of it. PCBs are the obvious first thing, the prices you pay for small runs for these days there's no way you can make them cheaper yourself. In some cases, especially if you've gone surface mount it could even be more cost effective getting the boards populated as well.
Where you want to be spending your time is on stuff that adds value to the pedal, stuff that's going to make people buy your pedal instead of A N Others.
Quote from: R.G. on May 05, 2015, 02:34:59 PM
start to finish?
No - not start to finish. It would be silly to try to do even small volumes one pedal at a time. Just production time (i.e. manual labor). Paint, quick-dry or not, dries in zero man-hours, unless you like to watch paint dry ;). As you allude, some batch processing is assumed. It may take two weeks to complete a pedal start-to-finish, but in that time you've actually built 10 or 20 or however many your plan requires.
Quote from: slacker on May 05, 2015, 03:04:36 PM
If you're making any quantity of the same pedal then you're probably better off out sourcing at least some of it. PCBs are the obvious first thing, the prices you pay for small runs for these days there's no way you can make them cheaper yourself. In some cases, especially if you've gone surface mount it could even be more cost effective getting the boards populated as well.
Where you want to be spending your time is on stuff that adds value to the pedal, stuff that's going to make people buy your pedal instead of A N Others.
+1
As I said, the problem is NOT building them, it's selling them. If you can sell 100, 200, 500, or 1000 pedals a year, you can probably find a way to make a profit doing it. Not necessarily a living though. Don't quit your day job.
Quote from: R.G. on May 05, 2015, 02:34:59 PM
Somewhere along the way, I personally would go stark raving mad at doing that same stuff over and over, day in and day out, without even any prospect of it getting better. I'd begin feeling like a slave to myself once the novelty wore off.
Great encapsulation ;) of life for most people on the planet. Most people I think, work to live. Extremely few live to work. I count myself fortunate to be somewhere in the middle - I like my job but it's not what I "live" for, it mainly just pays the bills. And buys pedal parts :icon_biggrin:.
A friend sent me the following statistics, gleaned from an online pedal- and pedal-seller web site.
For the years 2009 through 2014, they found 1709 new pedal BRANDS and 11104 new pedals. 2015 is on track for 111 new brands and 1263 new pedals.
Those are just the ones who have some kind of internet presence. That does not include the guys who sell to a few friends or through a local dealer or two, or by consignment, or only at guitar shows and such.
Can you say "crowded market"? Remember that the number of potential buyers and their potential spending money does not go up because there are more pedals to buy. Rather, the per-pedal price goes down, especially when you sift out the (very) few companies that sell a lot, and at a decent price.
Attack it as a hobby and its difficult to go wrong. Some wasted time. Maybe a bit of wasted money, but even that is unlikely if you get stuck with something you cant sell, just sell it at cost -> back to just a bunch of wasted time again.
Day job is a whole different kettle of fish. I would suggest working at your local super market for a better hourly rate. Or go into mass production and pump out mediocre unreliable SMT clones at $10 profit each. But then your going to need some fairly serious $$ to get that started.
Also remember, whether it be a day job or hobby, your going to be working for $5 an hour either way.
I plan to contribute to this conversation but I just got off work so I'll write something legitimate when I get home, I promise.
How do you deal with "we're gonna go big time with this" guy? I have a guy wanting to buy 10 at a time to sell for more through a parent company and talking like we'd take it to NAMM and I'm just like... I'm glad you like it but I didn't even design the pcb let alone the circuit. He thinks building more they should cost less because of quantity discounts but I'm like... It would actually cost me more to do this above a hobby level... Registered business, pay taxes, etc not to mention the monotony of building the same thing over and over again. "Well at that point you could hire someone to do the grunt work." Right so I could pay employment taxes and spend even more time on quality control to take home even less... Sheesh. Not to mention executing warranty duties of all these builds finding their way into the wild. I'm like... Uh... I don't mind building 3 to 5 at a time for a short run here and there with some money up front but beyond that...
Vigilante397 is an example of someone who has not quit his day job.
Might as well try it. Got nothing to lose, plenty of time to learn foundations of electrical engineering. The knowledge also comes in handy when on a job hunt later too.
I was wondering if anyone found ways to do these things faster. I find that when I get friends to help, it's not so overwhelming. Can't pay them what they deserve yet, but I may be able to one day.
At the end of it though, I have gained more knowledge than most people who don't want to try anything. How do you know something will fail unless you try it? :D
And luke, I am with you. I don't want to do more monotonous work and "go big". But I'll enjoy making a few as I am for now.
If something great happens, I'll be happy. If I end up hating it.. I'll have a bunch of caps and resistors if I ever need them.
Quote from: acehobojoe on May 05, 2015, 09:27:54 PM
And luke, I am with you. I don't want to do more monotonous work and "go big". But I'll enjoy making a few as I am for now.
If something great happens, I'll be happy. If I end up hating it.. I'll have a bunch of caps and resistors if I ever need them.
And you always know where you can unload said caps and resistors for a few extra bucks. I made a Facebook page to build a bit of a following and unload some extra pedals when I need parts cash. I've also recieved a few custom build jobs from it. I'll be happy if I can get to the point of a hobby that pays for itself. The other thing for me is you never know who it will lead you to meeting or what other opportunities it could lead to.
QuoteHow do you deal with "we're gonna go big time with this" guy? I have a guy wanting to buy 10 at a time to sell for more through a parent company and talking like we'd take it to NAMM and I'm just like...
You ask for payment upon delivery (and since it is 10 at a time you need a deposit before you begin) and see if he still wants them that bad. ;)
Yeah that's what I've been doing (for 3 at a time) but I think I'm already not charging enough...
QuoteI was wondering if anyone found ways to do these things faster.
If you are building them for 'customers' the most valuable techniques you'll probably find on your own. Sort of a trial by fire because it hurts sort of learnin' :) But you did ask and haven't gotten many answers. Here are a couple and I'm sure others have many more and better ones...
- Choose a pattern/workflow. Repeat that exactly until it is second nature.
- Do things in batches.
- Related to the first, have a plan from beginning to end, every single step. There is zero time for head scratching about anything whether that be "what's next" or "Will this method last in real use" and so on. Work all of that out so there are few or no mistakes or second guesses as this kills efficiency.
The builds will get faster as you repeat the same pedal over and over. Hopefully, the speed and quality of product increases as you don't want to sacrifice the latter for the former and those two are almost always fighting each other.
Quote from: Luke51411 on May 05, 2015, 10:08:49 PM
Yeah that's what I've been doing (for 3 at a time) but I think I'm already not charging enough...
I think you are being smart making such considerations. I'm not kidding, because the moment you accept money and there is
any reasonable expectation of earning a profit, it's business and no matter how we decorate it, it remains business (in the US anyway). Thusly, it's smart to consider everything including the stuff that's easy to ignore when giddy about making pedals, then make smart decisions based on those considerations.
It's not fair to grossly overcharge and it's not fair to work yourself to death and not get what you want out of it. A transaction is similar to a contract where either should result in a win/win for both parties. If both parties don't feel like they got something that
makes it worth it to them, it's a bad deal.
It's just a fine line because overall I think the connection I've made can work on some level I just need to set realistic expectations and communicate them well. It's weird, when people find out you build pedals and they hear them and like the sound they think you are some kind of genius guru that they can get cheap pedals from...
Actually one of my friends has been really great and understands the value of what I do and when I told him how much a pedal cost (that I was selling to one of his friends) I said like $80 or something like that and he texted back.... "Ok $100 sounds good" I need more friends like that. But everyone was happy in that situation, the guy loved the pedal, I made $100 and there is potential to sell a few more through those lines.
Quote from: Luke51411 on May 05, 2015, 10:25:30 PM
It's weird, when people find out you build pedals and they hear them and like the sound they think you are some kind of genius guru that they can get cheap pedals from...
LOL, yes. :) A good and scary feeling all at the same time. However, it's important that we all understand what we, and most importantly our time is worth business or not. We only get 24 hours in a day and it is very valuable because it is unrecoverable and finite. It is very easy to undervalue ourselves for a multitude of reasons; I know, I've seen me do it. ;) The price needs to be fair and the seller needs to believe in, and confidently support that fair price without lowballing themselves because 'fair' works in both directions. It's also as much perception (on both ends) as anything.
Sorry for the ramble, it's just close to my heart as I owned and operated a few unrelated businesses/corporations a decade ago and this subject kicks up the lessons I learned along the way and a new one for selling pedals. I could pretend and sell them outside of being a business, but that always catches up with you in one form or another.
You may want to look at some of the benefits of running a corporation rather than a sole proprietorship type of business.
I had a corporation which I started in 2003 and folded last year and with contract employment, having a corporation covers gaps in employment. My resume says I worked for my company for all of those years and I can put the details of what I worked on without regard to the time I actually spent. For example, I did tolerance, stress and failure modes effect analysis during 2003, did a few analysis jobs for another company in 2004 and managed a test program during 2005. I started as a contractor to another company in 2006 but for security reasons had to convert to being an employee to avoid the requirement of an expensive security assessment for my own company.
But guess what? I can claim full employment during that time, filling up some of the time holes in my resume. And if someone asks if I have experience in running my own business, I can say yes even though I performed only a fraction of the tasks necessary for a manufacturing operation. The advantage of a corporation as distinct from a sole proprietorship is that the liability extends only to the corporation and its assets - if someone sued me for anything I did in my corporation, he could only get its one asset - a Dell Dimension 2400 computer, new in 2004 and running Windows XP. As a sole proprietor, your liability extends to all the assets you own, like your house and car. If you sell a pedal to a band doing stadium rock and it fails, cancelling a $10 million show, you could be on the hook for a large chunk of change. As a corporation, only its assets can be taken.
If you are planning to make pedal building into a business, incorporate!
Or more simply, set up a limited liability company. An LLC is effectively a partnership without unlimited liability. They also tend to a bit less expensive and simpler to set up, depending on the rapacity of your state government. Texas, Nevada, New Mexico, a few others, tend to be under $500 and without a huge amount of paper work. The high-tax (and moribund) states tend to be vastly more expensive and invasive.
^ I own a C-corp and LLC in Illinois, somewhere I'm assuming you'd consider "rapacious". Neither were expensive or difficult to start and neither are complicated to operate. Just sayin'...
You can set up a corporation in Nevada or Wyoming very cheaply, and both states have privacy laws making the ownership of the corporation difficult to determine. You do not need to be a state resident to set it up, yearly fees are minimal. Further, no state income taxes in those states.
When I first discovered the world of stompbox building I immediately became obsessed and decided it was what I wanted to do with my life. I seem to remember a thread similar to this one (though I am unable to find it now through searching), which shared similar pieces of advice to those found here. The main one that resonated with me was:
"What do you have to offer the world that it hasn't already seen?"
I have designed a couple original pedals, but the majority of builds I do are still clones of existing pedals designed by brilliant engineers from existing companies. There are people on this site whose original designs I think are brilliant enough to "make it" (deadastronaut, kyurie, pickdropper to name a few), but alas I am not as brilliant. So while my pedal building has brought in a little income (ran the numbers last year and my profit after parts but not including time spent was about $2000) I believe it will remain nothing more than an awesome, obsessive, and slightly profitable hobby.
//endRant
Quote from: garcho on May 06, 2015, 09:28:51 AM
^ I own a C-corp and LLC in Illinois, somewhere I'm assuming you'd consider "rapacious". Neither were expensive or difficult to start and neither are complicated to operate. Just sayin'...
Good to know.
Never checked Illinois, never thought about it, and I'm not sure why you'd think I'd think they were rapacious.
But good to know anyway. What does an Illinois-inexpensive cost?
Just thought Illinois was a good example of a state that often has different business policy than say, the SW. Of course, Illinois has one policy that trumps all others: corruption. :(
Both companies were incorporated about 10 years ago, things might have changed since then. LLC was $500, the C Corp was less, IIRC. Does not include countless hours of "meetings" with partners, nor fees for accountants and lawyers.
Quote...I'm not sure why you'd think I'd think they were rapacious.
Didn't mean to sound combative, it was more of an encouragement to others to start small businesses even if they do live in a state that is known for being rapacious, like Illinois ;) The more small businesses (those with prudent business plans, anyway) the better, as far as I'm concerned.
And speaking of, happy Small Business Week. Friends of mine in Chicago created that; it just got featured on google's homepage.
In my state the LLC is only 150.00 but then you must...
File for and pay for a business license with the City/County. Then zoning people are going to get involved because you are running a business from a residential address; aka you need an exception. And a number of other things. I'm all for more small businesses but it's better if they do the proper research, filing and preparation before they begin doing any business. Most jurisdictions, at least in my neck of the woods state such explicitly. They all communicate with each other in one form or another so if you skip over one or more of them, they'll come calling, collecting and fining at the most inopportune time.
I think for me, I can definitely turn a profit on singular pedals, but I can't neccesarily make a comfortable amount unless I do about 10 in a week. I hope that happens one day
The cost of incorporation in Ontario was $360 when I did it and I believe is $390 now. There is no distinction between a corporation and an LLC (limited-liability company) here. I chose a numbered company since you need a NUANS search to determine if a company name had been used before if you use a normal name. Corporate taxes can be a pain and they are more expensive (if you use an accounting service) than personal taxes, so be prepared to add that to your list of things to consider. I never had any business license, but I was a consultancy, not a factory.
Quote from: acehobojoe on May 06, 2015, 05:38:32 PM
I think for me, I can definitely turn a profit on singular pedals, but I can't neccesarily make a comfortable amount unless I do about 10 in a week. I hope that happens one day
It's easy! All you have to do is find 10 people a week who a) know your pedal exists, and b) want to buy it!
;)
I think it's probably been said a few times farther up, but definitely one of the keys is outsourcing as much of the work as possible so you can focus your discipline on the parts that only you can do. Your time is the most valuable resource you have, the limiting factor to the amount you can produce, so the more time you can save yourself, the more you can build and the more
It's very much worthwhile to pay a company like Pedal Parts Plus $6.00 to screenprint, paint and drill each of your boxes, than having to learn how to screenprint, test different screen ink for durability, get into powdercoating, that sort of thing.
If you don't know much about designing PCBs yet, there are a few PCB suppliers who allow their projects to be used in commercial builds, and it's going to be worthwhile to pay $6-10 per PCB to avoid having to learn EAGLE, mess up a whole lot of times (which costs prototyping $), learn how to order PCBs from China, compare prices depending on specs, that sort of thing, and after all that, still pay $1.00 to $4.00 per PCB at the quantities you will need.
Assembly, to me, is the part that makes the most difference in the final quality, and so it's the one thing I wouldn't look into outsourcing, at least for a small builder. As R.G. can attest, good quality assembly can definitely come out of China, but it takes a lot of hand-holding and iteration because they try really hard to cut corners and do it as cheaply as possible. You also have to design the PCB with assembly in mind, which means you have to understand the methods and process really well. It's better for you at this point to have full control over your parts selection, sourcing, and soldering methods.
Quote from: karbomusic on May 06, 2015, 03:40:52 PM
In my state the LLC is only 150.00 but then you must...
File for and pay for a business license with the City/County. Then zoning people are going to get involved because you are running a business from a residential address; aka you need an exception. And a number of other things. I'm all for more small businesses but it's better if they do the proper research, filing and preparation before they begin doing any business. Most jurisdictions, at least in my neck of the woods state such explicitly. They all communicate with each other in one form or another so if you skip over one or more of them, they'll come calling, collecting and fining at the most inopportune time.
Yikes. I'm in Iowa and I just filled out a one-page letter template that basically just said I'm starting an LLC, here's the name, and here's the address. The filing fee was $50.
It felt kind of like an "I... DECLARE... BANKRUPTCY!" sort of deal (how could it be that easy?) - but they sent me my registration within a couple of weeks :)
Quote from: aion on May 07, 2015, 10:00:32 AM
Yikes. I'm in Iowa and I just filled out a one-page letter template that basically just said I'm starting an LLC, here's the name, and here's the address. The filing fee was $50.
I think you won that one :P I thought Idaho was going to be the cheapest at $100 to set up an LLC.
Hahahahhah -- I just got popped by zoning a couple weeks ago. I had to apply for an Occupational License for my "home business." $51.50.
MC
Quote from: aion on May 07, 2015, 10:00:32 AM
Yikes. I'm in Iowa and I just filled out a one-page letter template that basically just said I'm starting an LLC, here's the name, and here's the address. The filing fee was $50.
It's that easy for me other than the fee being slightly higher. However, getting the LLC registered isn't the only step. In other words any other government entities that also need to be contacted, paid, setup for etc. don't magically get registered simply because the LLC registered with the state. The LLC is just the shell entity for a company/assets. Now, if your city/county/zoning etc. allows you to run a manufacturing business out of your home with zero fees paperwork, you are in good shape. Let's not forget the federal side either.
I'm not saying anything is hard per se, I'm saying that many ignore or don't realize how much is actually involved. I fully promote going into business for one's self but we want to remove the naivety and educate if at all possible.
Quote from: aion on May 07, 2015, 10:00:32 AM
I think it's probably been said a few times farther up, but definitely one of the keys is outsourcing as much of the work as possible so you can focus your discipline on the parts that only you can do. Your time is the most valuable resource you have, the limiting factor to the amount you can produce, so the more time you can save yourself, the more you can build and the more
Those things are all true, but what you can get away with outsourcing is dependent on your market. If part of what you are selling, and what your buyers are buying, is some kind of mojo/hand-made/hand-etched/hand-painted/made-in-USA/what-have-you kind of appeal, you won't be able to outsource that. John Lyons/Basic Audio comes to mind as an apparently successful boutique builder who couldn't outsource his PCBs. ZVEX is another who's appeal was partly hand-painted pedal art. Jon Patton (midwayfair) has that going for him too (although I don't think he's making his living selling pedals). Figure out what sells
for you, and how to sell it,
first - then figure out how to make it profitable, sustainable, lucrative. It could be pedal-art, mojo-vibe, local-appeal, or cheap-ish clones, only you can know. Don't assume that the key to
your success is low cost and high volume. That's the crowded part of the market anyway and it's very hard to distinguish yourself in that space.
Quote from: karbomusic on May 07, 2015, 12:13:23 PM
I'm not saying anything is hard per se, I'm saying that many ignore or don't realize how much is actually involved. I fully promote going into business for one's self but we want to remove the naivety and educate if at all possible.
"Everything in war is simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction that is inconceivable unless one has experienced war."
Karl von Clausewitz, "On War", Chapter 7, "Friction in War"
Quote from: GGBB on May 07, 2015, 12:23:01 PM
Those things are all true, but what you can get away with outsourcing is dependent on your market. If part of what you are selling, and what your buyers are buying, is some kind of mojo/hand-made/hand-etched/hand-painted/made-in-USA/what-have-you kind of appeal, you won't be able to outsource that.
ZVEX is another who's appeal was partly hand-painted pedal art.
According to a Fretboard Journal article from a few years back, ZVEX pedals are manufactured in South Korea, at least as far as the electrical assembly is concerned.
I could build ten pedals a day ..the drilling and painting is the worst parts other than sourcing parts ..and that I am going blind lol
my approach to pedal building is the same way I do my oil paintings, slow and meticulous step by step one at a time. I am a custom boutique craftsman in no rush for volume quality, love, pride and artistic value > mass produced
Quote from: karbomusic on May 07, 2015, 12:13:23 PM
Quote from: aion on May 07, 2015, 10:00:32 AM
Yikes. I'm in Iowa and I just filled out a one-page letter template that basically just said I'm starting an LLC, here's the name, and here's the address. The filing fee was $50.
It's that easy for me other than the fee being slightly higher. However, getting the LLC registered isn't the only step. In other words any other government entities that also need to be contacted, paid, setup for etc. don't magically get registered simply because the LLC registered with the state. The LLC is just the shell entity for a company/assets. Now, if your city/county/zoning etc. allows you to run a manufacturing business out of your home with zero fees paperwork, you are in good shape. Let's not forget the federal side either.
I'm not saying anything is hard per se, I'm saying that many ignore or don't realize how much is actually involved. I fully promote going into business for one's self but we want to remove the naivety and educate if at all possible.
+1
I own an LLC in the Kansas City area (commercial printing and signage) and while the LLC was super easy and my overhead is extremely low, a lot can depend on your municipality. In a larger metropolitan area (especially one that shares a state line) there may be all kinda of zoning and licensing issues in one city that simply don't exist in others. For example, the city where I live doesn't require a business license for a home based business for a majority of industries, but the neighboring city requires a business license for any business run within the city limits.
I build as a hobby and with my LLC I could easily setup another business within that LLC with a couple of forms with the state, so if I ever did sell and make anything, I'd be in good shape.
If you aren't looking to make a living at it, I wonder if you can build a pedal as a hobby, gig with it or even practice with it once and sell it as a used item. Would probably raise some red flags if it happened too much. My brain works weird, I know.
Eeek at the LLC licencing thing. Mum saw once how many damn courier parcels arrive for me (note: I haven't made a damn cent on this hobby, the odd dollar I do get goes right back on parts and PCBs) and suggested I make a company.
Bendeane--
The very issue I ran into was that I was moving so much merch. (in and out) via post and auction sites, that I just KNEW someone (the government) would figure I was making money at this-- and be on my tail for unclaimed income (taxes).
So, as of Jan. 1, 2015... I went legit and formed a company. Not a big cost in legal and all-- maybe $1,000 total to get licenses, checks, business card, business software, etc. etc. etc...
Really-- it is more of a hassle to do all the bookwork, and "business" stuff-- just to prove you aren't getting rich at it. But, at least I am legit now.
MC
^ +1 to that, book keeping and logistics are a total pain, also spending half a day replying to emails also means you lose half a days work usually with little gain, but it sure beats going to work for someone else in a 9-5 as far as I am concerned.
Well, I still work 9-5.. This is a hobby, which actually DOES make money, and I enjoy it... so, it is win-win-win.
Plus I get to play with cool stuff I create.
Quote from: Mac Walker on May 07, 2015, 09:15:49 PM
According to a Fretboard Journal article from a few years back, ZVEX pedals are manufactured in South Korea, at least as far as the electrical assembly is concerned.
Could very well be true - I know they have a cheaper screen-printed Vexter series now. But originally and still now for some pedals at least they are hand-painted, which is part of their marketing appeal. If early on he had switched to screen printed boxes in order to lower costs and speed production, there's a strong chance his business wouldn't have bloomed like it has. But there's no way we can really know that. Consumers in general and I think the boutique pedal buyer especially are sensitive to cost-cutting product changes. So much so that you often hear things like "the original model was great, but they changed them and now they're crap" whether actually true or not. The buying public is suspicious of product changes, even when marketed as improvements, even when they really are improvements. Remember "New Coke?" My point was that if you become successful at selling a certain thing, and you change that thing (especially to cut costs), don't assume that the success will continue.
'Jesus man! You don't look for acid! Acid finds you when *it* thinks you're ready.' - Hunter S. Thompson
Same applies to business ideas. Keep it a fantasy/hobby/underground until *it* finds you.
QuoteSame applies to business ideas. Keep it a fantasy/hobby/underground until *it* finds you.
Good luck with that because said entities now get to "guess and assume" how much you made when they do find you. It's similar to when someone gets caught selling a little bit of weed and they then confiscate all your music gear and sell it to pay taxes on 'sales' they assume you made since you were hiding anyway. I've seen it happen to others multiple times. It's obviously a scam but those who hold all the cards, always win the game.
I guess someone can go the Vegas route as sometimes you can just play dumb and naïve but it's financial and legal Russian roulette albeit there seems to never be a shortage of those willing to play.
Just remember, sale takes place where product was delivered. My LLC is in Kansas and I'm not obligated to collect any taxes if I deliver by any means (including personally drive) my product to my client in Missouri. I don't have a business entity in Missouri and it's not my burden to collect tax for them. It's on the buyer to figure out use tax (that's right, all those online purchases you make that you don't pay sales tax on...you are required to pay the use tax as it applies in your state. Nobody ever does, but it's the law).
If you a real business you also need to factor in RoHs, CE, FCC and all the other shit that costs fortunes. Even soldering by hand with unleaded solder is a pain in the arse, even if it just the fact that I go through 10 times the amount of soldering tips in the same time and need an iron that is a lot hotter.
Not sure what the laws are in the various united states, but here in Ontario, Canada, I can claim self employment income including expenses without having any sort of licensing or registration. Basically, you can run your own small business and file your earnings without any extra hassles. There are probably limits to how much you can claim without raising suspicion i.e. audit, but for the hobbyist pedal builder/seller this wouldn't be an issue. We're also not obliged to collect or submit any sales tax on sales under $20k (that was the value many years ago). You can register your small business and obtain tax numbers for free (not llc or inc) if you wish, although I did that years ago for a small computer business and see little point unless your sales are over the no-tax limit or you want to protect a business name. Obviously this doesn't provide protection from personal liability, but it keeps you legit with the tax man.
EDIT: LEET!!!
Regarding Ontario law, you can set up a sole proprietorship which allows you to use a "company" name other than your own name and allows you to establish a bank account for it. You have no protection against legal liability since the sole proprietorship is basically yourself.
What I meant was IF you should start a bonafide business you'll know. Don't just decide one day and think that going through the first steps will make it all happen for you.
Quote from: garcho on May 09, 2015, 10:16:48 AM
What I meant was IF you should start a bonafide business you'll know. Don't just decide one day and think that going through the first steps will make it all happen for you.
+1 - especially when those first steps are merely about how to lower your costs and increase production.