Weaver said the cost of manufacturing the Purism’s two phones is largely the same, despite one being made overseas and the other domestically. The phone that’s made in China costs around $600 for parts, manufacturing, and assembly while the U.S.-made one comes in at $650.
“Producing goods in China vs. the U.S. is the same plus or minus 10%,” said Weaver, based mostly on automation.
The difference between what Purism charges customers for its two phones is partly due to the higher profit margin the company collects for its U.S.-made device. People who want stronger security are often willing to pay extra for it, Weaver said. It also covers the extra overhead from some customers wanting to verify that Purism’s supply chain is secure and the small additional cost of U.S. manufacturing.
The comments for the article are interesting.
A “fair price” is, of course, whatever one can get. But, still, I thought people here would be interested that the profit margin on the made-in-USA phone is over 200% (price of $1999 vs. Weaver’s estimate of the cost of $650). After all of the “refusal to provide refunds” and the current pace of help from Purism support, I thought his tone was awful. It seems like he could afford better customer service.
That rather depends on sales volume. In the extreme, it doesn’t matter what your profit margin is if you don’t sell any.
Of course, you are talking about gross margin, and that doesn’t take into account hardware design and development cost, initial software development cost, ongoing software development cost, support cost, transport, rental, marketing, ITC infrastructure, power, and all other overheads (and may not take into account manufacturing infrastructure - it is unclear from the quotes that you quote).
Given that the specs of the Librem 5 differ from the specs of the Liberty Phone, it isn’t obvious whether this is even an exact apples-to-apples comparison v. whether it was intended to compare the Librem 5 with the Librem 5 USA (as it was originally, which would be apples-to-apples).
As far as the comparison of China v US goes, I think the key word is “automation”. If both are automated manufacturing lines then there is a large upfront cost in either case and the unit manufacturing cost goes down as the volume goes up. But we don’t know the volume in either case.
It doesn’t matter whether one is talking Librem 5 USA or Liberty. The $650 & $600 costs compared to the sale prices for the Librem 5 vs either the Librem 5 USA or Liberty is distorted. One of these has a much higher gross profit margin (and they all share the same development costs; I think Todd’s quotes were pretty clear about that).
I think that distortion is worth noting … and I don’t think it’s flattering, especially given Purism’s history of denying refunds, etc.
Wish you could still buy a new L5USA for 650 or 700, I would buy one in a heartbeat, maybe purism should resurrect the L5USA and sell it for 999, a lot of us would buy it if the price point was more reasonable. I would love to have one of those.
“You can look at our concrete numbers. We sell a Chinese made Librem 5 phone for $799. We sell the Liberty phone for $2,000. When you’re looking at just those numbers alone, that looks like a giant leap in cost. But there’s a couple of factors that are not publicly known when you’re looking at just those prices. When you’re looking at COGS, cost of goods sold, our Librem 5 phone is equivalent in cost to about an iPhone. It’s about $500 and some odd dollars, $550. So we can see that the Librem 5 phone doesn’t have a very high margin when we sell it. The Liberty phone, same COGS componentry wise, but to produce it on US soil, we’re adding not quite a hundred dollars. So it’s about $650 to produce that entire phone. But what we’re doing by selling it for greater originally, we’re looking at a lot of differentiators for us. It wasn’t just made in the USA. It’s the fact that it’s a secure supply chain, that you know, staff that’s completely auditing every component, which means we’re selling to a government security market with all those additional layers that we’ve added on top.”
From the “How a $2,000 ‘Made in the USA’ Phone Is Manufactured” article and audio interview:
What the general public may not realize is that the cost of US manufacturing to produce a low-MOQ PCBA from a bare PCB is $200 per board. Competing quotes have exceeded $250 per board.
That’s $200 to solder components (already owned) onto bare PCBs (already owned) and conduct QA testing. Each. Barring the acquisition of an in-house manufacturing facility, one may be shocked at the barrier to entry given the economies of scale.
He just indicated that the increased BoM + board fab cost was only $50 more for made-in-the-USA. And that included any increased cost for the PCB production. Right? What else am I to make of the quote I provide:
Weaver said the cost of manufacturing the Purism’s two phones is largely the same, despite one being made overseas and the other domestically. The phone that’s made in China costs around $600 for parts, manufacturing, and assembly while the U.S.-made one comes in at $650.