Is there any real money in ARFs?

[SuperDave]

I was thinkin'. And that alone can be dangerous. Is there any REAL money in ARFs? Specifically giant scale. Think about it. There's:

1. Research and development
2. Travel to distant lands
3. Actual 'cost' of each plane
4. Shipping to states
5. Custom fees
6. Advertising
7. Staff and operating costs
8. Rep commission
9. Spare parts

After all that... what's left of say the $1000.00 asking price per plane?

Just curious.

[SleepyC]

I think its like anything.
The first 1000planes sold = breaking even.

If you have a HIT, and the plane turns out to be "the plane" of the season...
and you sell 1000+ more.. then YES I think there would be some Cheddar to make.

But I'm sure its not as much money as most people thing - At least for the smaller ARF companies...


I think the ones that are part of the BIG dogs.. (GP, HANGER 9 ect) are making SCRATCH!!
but the investment amount is huge as well.

[wildhare]

You forget other things like the cost of parts and labor to fix damage claims. UPS only pays back cost and will not accept claims from the customer, only from the shipper. So we have to do all the work and then lose money on each claim.

And then there's shipping costs for any warranty items that need to be replaced, we eat that as well.

How about the cost of warehousing and insurance? No, there's not much left at the end. But it's fun.

TF

[SleepyC]

Tom,
Good point.
When your not on the check writing end of a business its easy to forget even the light switch costs you money!

[NCFR!!]

I don't want to start a long political debate. The following is simply a statement of facts and how they relate to our economy.

China holds their currency at an artificially low rate. They do this by selling their currency (yuan) and buying US Dollars in the form of long term treasuries. Ever notice that the short term rates (i.e. Fed Funds Rate) is 5.25% while the long bond is 4.6%?? I trade foreign currencies and teach other traders. I had one client who owned a manufacturing company for 30+ years. The last job he bid on he lost to China. They could produce AND deliver the final product to the client in the US for LESS than what he could buy the raw materials for. Notice that in some cases you can get a completed ARF from China for less than what a Kit costs in the US?

The new Sec. of Tres. is focused on getting China to cease its intervention of the yuan and start letting it float. It is a catch 22 though - If the yuan adjusts to where it should be, the price of everything we love (ARFs plus about 70% of what you see in Wal-Mart) will suddendly be 50%-100% more expensive. The US consumer can not handle that kind of impact all at once. On the other hand, if nothing is done, the jobs all go to China and no one can afford even the cheaper prices - OR China corners the manufacturing market and then raises rates.

At some point it HAS to adjust. Hopefully it will be over a long time to ease the pain to the consumer.

So - to answer your question - YES, there is money in ARFs. Could that (and should that) change in the future - YES. I think that even if they charged double, there would still be a market for them. Although, at that price, many people will start building again.

Keith Sessions

[RedRider]

I think the real value of ARF's is that it provides stable well paying jobs for citizens in asian countrys, promoting economic growth.

[SleepyC]

	Quote:
	Although, at that price, many people will start building again.

Even if the price of an ARF was 1.5 to 2 times more than a kit.. I bet A LOT of people would still buy them.

i mean building is great, but sometimes you just want to fly.

I'm going to build a 35% plane here in a month or so... but I also own a few ARF's...
the ease of slapping together a good arf will always outweigh the cost of them.

If the entire arf market price increases I bet people just deal with it...

[Ion01]

Also, you might consider that arfs will probably sell more than kits because kits take time to build and then more time on top of that before one crashes or is retired where as an arf is flown almost immediately so it is crashed/retired and replaced more often. Lets say for example, on the average, it takes 4 months to build a kit and, on the average 12 months of flying before someone crashes. Well, if you can remove that 4 months by making an arf then you will sell more.

[bosshoss]

Rockefeller had it right when he said "it is wise to leave a little profit in for the next guy" , but the margins that the LHS operate at are so slim, if the status-quo gets upset, some mom and pop's will go under.

Support your Local Hobby Shop.

[SuperDave]

	Quote: Originally Posted by wildhare
	You forget other things like the cost of parts and labor to fix damage claims.

They best not crunch the 41% Pro Series Extra 300 I just bought from you!!!! LOL

[snap a saurus]

Volume is the key, make a little sell a lot but first you must make a good quality product. A lot of them do it for the love of it, make some money and some even go out of business.

[youngflyer]

this is a very interesting thread. i guess engines are the same. i was talking with the owner of rcs david garrison and i asked how buisness was going and his answer do not quote me but was buisness is fantastic but there is still little money to be made!