How To Make A Pen For 99 Cents?

[PolishSoldier]

I heard that some models of Jinhao or Baoer could by buy for this prize. Just wondering how they do this? What are the costs of nib production? Online shop also has some costs of making this business & they must still make some profit for selling 0,99$ pen.

 

Anyone know, anyone has any ideas?

[MBFan]

I imagine China has a large deposit of natural resources that are cheap to mine (because of cheap labour) and these resources are cheap to transport. I assume that these companies buy in bulk, for which there is usually some type of bulk-purchase discount. This drives the price down per pen produced. They then have, again, super cheap labour to make the pens. It's probably predominantly mechanised processes, but the people they have working there I don't think would be paid quite as well as someone in, say, a Pilot, or Platinum factory. All in all, this results in a cheap to produce pen.

 

Disclaimer: I'm only a lay person giving my opinion. I can't verify any of these facts.

[KBeezie]

If they can sell a pack of BICs in the United States for less than $1 (which has some degree of profit on it), then I imagine China can make 1 pen for a dollar. (The BICs probably came from China to begin with).

 

But usually when it comes to Jinhao/Baoer in auction format they almost always have 3 to 4 dollars set for shipping charge, where as a buy-it-now Jinhao for around $6-7 has 'free shipping'. So they make up their cost via shipping, they're not going to sell AND ship for a dollar.

[richardandtracy]

I don't know the economics of making a brass pen, but from experience at work I can get an idea of the costs of an injection moulded pen.

 

Injection Moulding Tool cost $70000. Has 6 pens per shot. Will last at least 100000 shots, so 600,000 pens= $0.116 each

Injection mould tool $1M, lasting 50 million pens = $0.02 each

Plastic. We have an injection moulding that weighs 2kg and uses $1.50 of plastic, so for 0.014kg of plastic = $0.011 each

Assembly time of 2 minutes per pen, hourly rate of $5, = $0.167 each

Nib, $10000 tool lasting 1 million nibs = $0.01 each

Nib Punching machine, $100000 lasting 10 million nibs = $0.01 each

Nib Tipping & welding, probably the same = $0.01 each

Nib Stainless steel base material, $5000/tonne, 0.001 kg each = $0.005 each

Sac tool & mould should be less than $0.10 each

Sac guard, $10000 tool lasting 1 million sac guards = $0.01 each

Sac guard Punching machine, $100000 lasting 10 million sac guards = $0.01 each

Sac guard base material, aluminium, $8000/ton, 0.002 kg each = $0.016 each

Factory overheads $50000/month, 120 pens per tool per injection mould tool per hour, 10 hour days, 30 days per month = 216000 pens, or $0.231 each

Design cost: $20000 for 1 million pens = $0.02 each

 

Total: $0.736 each

 

That leaves $0.254 for profit, advertising, taxes etc.

Relies on being able to sell 2.5 million pens a year, and the hourly rate remaining at or near $5. If it creeps above $10/hr, it's impossible even with the economies of scale used above. Mechanical pen assembly is not viable for a 99c pen as the machine would cost more than it saved.

 

Regards,

 

Richard

 

Total:

[KBeezie]

Course the OP is only looking at the auction's starting price, not the shipping, once you factor in the shipping and the possible bidding it comes out to about the same as the BIN listing.

[PolishSoldier]

If they can sell a pack of BICs in the United States for less than $1 (which has some degree of profit on it), then I imagine China can make 1 pen for a dollar. (The BICs probably came from China to begin with).

 

But usually when it comes to Jinhao/Baoer in auction format they almost always have 3 to 4 dollars set for shipping charge, where as a buy-it-now Jinhao for around $6-7 has 'free shipping'. So they make up their cost via shipping, they're not going to sell AND ship for a dollar.

Yes of course You must add cost of shipping, but if You are living in China or even in a city shop is placed, shipping costs are way lower.

[PolishSoldier]

I don't know the economics of making a brass pen, but from experience at work I can get an idea of the costs of an injection moulded pen.

 

Injection Moulding Tool cost $70000. Has 6 pens per shot. Will last at least 100000 shots, so 600,000 pens= $0.116 each

Injection mould tool $1M, lasting 50 million pens = $0.02 each

Plastic. We have an injection moulding that weighs 2kg and uses $1.50 of plastic, so for 0.014kg of plastic = $0.011 each

Assembly time of 2 minutes per pen, hourly rate of $5, = $0.167 each

Nib, $10000 tool lasting 1 million nibs = $0.01 each

Nib Punching machine, $100000 lasting 10 million nibs = $0.01 each

Nib Tipping & welding, probably the same = $0.01 each

Nib Stainless steel base material, $5000/tonne, 0.001 kg each = $0.005 each

Sac tool & mould should be less than $0.10 each

Sac guard, $10000 tool lasting 1 million sac guards = $0.01 each

Sac guard Punching machine, $100000 lasting 10 million sac guards = $0.01 each

Sac guard base material, aluminium, $8000/ton, 0.002 kg each = $0.016 each

 

 

$50000/month, 120 pens per tool per injection mould tool per hour, 10 hour days, 30 days per month = 216000 pens, or $0.231 each

Design cost: $20000 for 1 million pens = $0.02 each

 

Total: $0.736 each

 

That leaves $0.254 for profit, advertising, taxes etc.

Relies on being able to sell 2.5 million pens a year, and the hourly rate remaining at or near $5. If it creeps above $10/hr, it's impossible even with the economies of scale used above. Mechanical pen assembly is not viable for a 99c pen as the machine would cost more than it saved.

 

Regards,

 

Richard

 

Total:

Abt Stainless steel I checked price depend on quality, prices for tonne are btw 900-7000$ & I doubt they have best quality steel

I doubt they pay workers 5$ per hour for assembling pens. Minimum wage in Poland is 3,5 $ per hour & lets face it per capita (not overall) Poland is way wealthier then China

Abt plastic You can buy tonne of recycled one for 500$

Factory overheads is also lower I believe. I doubt they have any insurance for instance, thinks like sanitary condition standards do not excists in most chinese factories as far as I know.

Edited April 23, 2014 by Lukasmaster

[KBeezie]

Yes of course You must add cost of shipping, but if You are living in China or even in a city shop is placed, shipping costs are way lower.

 

Thought those listings had a flat rate shipping (not automatic, meaning part of the shipping is not used for the shipping cost).

 

You planning on going to China to pick one up in person for 99 cent (I doubt they have it locally set to that price especially in a retail shop)

Edited April 23, 2014 by KBeezie

[PolishSoldier]

 

Thought those listings had a flat rate shipping (not automatic, meaning part of the shipping is not used for the shipping cost).

 

You planning on going to China to pick one up in person for 99 cent (I doubt they have it locally set to that price especially in a retail shop)

Yes I suspect they making extra profit from shipping

[KBeezie]

Yes I suspect they making extra profit from shipping

 

I also suspect they only sell those pens at that price to non-locals as their primary means of income.

[PolishSoldier]

 

I also suspect they only sell those pens at that price to non-locals as their primary means of income.

I tell You something even more funny, Jinhao 1200 from China cost 8-9$ inc. shipping in polish online stores in cost 20-24$ & I pretty sure they paying less then individual buyer

[richardandtracy]

Abt Stainless steel I checked price depend on quality, prices for tonne are btw 900-7000$ & I doubt they have best quality steel

I doubt they pay workers 5$ per hour for assembling pens. Minimum wage in Poland is 3,5 $ per hour & lets face it per capita (not overall) Poland is way wealthier then China

Abt plastic You can buy tonne of recycled one for 500$

Factory overheads is also lower I believe. I doubt they have any insurance for instance, thinks like sanitary condition standards do not excists in most chinese factories as far as I know.

I was assuming lowish quality stainless steel in relatively small lots rolled to the correct thickness by someone else.

I'm guessing as to the labour rate - and using $5/hr as an example.

The plastic would have to be fresh, and that is the price I know the company I work for has paid for injection moulded lids to containers. I accept it was an unusually high spec plastic with a -50 to +90 temp range + impact resistance at both extremes of temp, so the cost may be a bit on the high side.

Factory overheads are difficult to gauge, you'd need room for one injection moulding machine, and probably 8 presses, with a dozen assemblers, small design office, large packing area and similar handling equipment. Possibly 600m^2 floor area. Maybe $50k/month is OTT, but it does show it's possible.

 

Regards,

 

Richard.

[basterma]

Richard, thanks for the estimate. It was nice to learn about the process of injection molding a bit.

[KBeezie]

I tell You something even more funny, Jinhao 1200 from China cost 8-9$ inc. shipping in polish online stores in cost 20-24$ & I pretty sure they paying less then individual buyer

 

They're listed as about 10-11$ for me in the US. Shipping is probably higher for them to Poland.

Edited April 23, 2014 by KBeezie

[Tenkai]

I would like to add that did you know it is cheaper to make a fake egg/milk powders over there than to breed a chicken/produce real milk powder over there? ^^"

 

And yes, they profit from it.

 

Do note that many countries do outsource manufacturing over to China because it is real cheap, the issue is trust, communication and QC.

[Sasha Royale]

A selling price, that reflects cost + overhead + profit , is a capitalist concept.

The business model in PRC is quite different.

[KBeezie]

A selling price, that reflects cost + overhead + profit , is a capitalist concept.

The business model in PRC is quite different.

 

There would be no point in them selling overseas if someone, be it the country as a whole, or someone at top is profiting from the sale of it. For example, you don't utilize 1.50$ worth of materials, to sell something at 1.00 eventually you're going to owe a debt and not be a be able to eat. The "cost" is still there, regardless if you pay your workers extremely low rate, so unless there's a profit what's the point in doing it? We're talking bout pens here, not humanitarian services.

[Pickwick]

My observation browsing eBay which seems to have the highest volume of fountain pens for sale, the number of pens offered at 99 cents on this discussion seems to be minuscule. The majority start around $2.00 and above.

 

China is now in 2nd place as a growing world economy. The manufacture of pens is probably as significant to them as a flea to an Elephant!

[Jimmy Joe]

If you look on Taobao, there are a lot of pens for under 6 yuan (less than a dollar US). Those pens that are $5 to $7 with free shipping via ebay are often 50 cents plus shipping--which is not $4 or $5--in China.

[KBeezie]

Kind of makes you wonder just how cheap you can get something if you push them out in massive quantities with no quality control. Though I do know China does have similar manufacturing equipment as the rest of the world, even some plastic molding stuff so it's entirely possible for some to be up to par with western competition, except they don't do the QC most of the time.