Getting started: building a modular company, part 3

You’ve prototyped your idea and revised and versioned and tested and tested and now you’re finally to Build The Thing so people can get it in their racks. What do you do?

There are a few options:

Do it all yourself

The do it yourself model has a few variations. 

• Kits: kits are common in Eurorack. You can build a kit for people to do their own assembly. If you go this route, you have to think carefully about what you want to provide. Some kits are complete: the PCB and all the parts are included. If you do this, keep in mind that you’ll need to pack all these individual components into some packaging that the end-user can decode. This can quickly get daunting, and is frankly why we’ve never done it. Some kits expect the user to source their own parts. This is simpler for you but a lot of folks lack the confidence to do their own sourcing. A nice happy middle ground is saving a shopping cart on a service like Mouser.com. You can put all the parts into a cart and share that with users so that all they have to do is go to checkout.
• Fully assembled: self explanatory. You spend a lot of time hand soldering and testing. Or have a soldering party and quickly wear down the good will of your friends.

Do some of it yourself

Some brands do a mixture of the above and below options. They send the PCBs to a contract manufacturer for all the SMD components, and do any through-hole soldering and finishing themselves. This has a lot of pros: machines are better at placing parts and soldering joints than humans are. It saves you a ton of time and possibly some of your sanity. Some smaller parts like QFN and BGA parts are also virtually impossible to hand place.

Have someone else do it all

A contract manufacturer can also build turnkey-ready products, even packaging them. We use this option; soldering is fun, but we’re all remote and we’d rather spend our time on the fun stuff like making more modules! If you work with a contract manufacturer, remember that they are your partner: find someone you trust and let them do their job. Ask them how you can streamline processes for them. Make an effort to treat them well and they will treat you well.

Selling

Who

Here again, paths diverge. A few options include selling direct, to retailers/resellers, or both. You’ll also want to consider who your audience is: is it only domestic or will you ship internationally as well?

Retailers do a massive service for us: most of us don’t have showrooms where people can walk in and play with gear and ask questions. Retailers get your product in front of more people that you can on your own. Great! So what’s the con? Money. Retailers are going to take a large chunk of money: they aren’t going to buy your product at MSRP and then sell it for no profit! That means the amount you make per unit is substantially lower…but you will theoretically sell more units. Like a contract manufacturer, retailers are partners. Treat them well and they’ll do well for you.

Direct sales, on the other hand, are nice because you don’t give up that chunk of revenue that retailers take. But obviously, it’s harder to get noticed if you’re not in shops.

We do both: we have a phenomenal network of retailers around the globe. We also sell direct. We want customers to have the option to support the local shop, and particularly for international customers, that’s often the most cost effective way to make a purchase.

How

You can do the selling yourself, or you can have a distributor.

If you choose to do order fulfillment yourself, keep in mind that the more you sell, the more time you’ll spend packaging and shipping and less time making modules. If you’re selling to retailers, you’ll also need to invoice them and make sure they pay. This seems small but it can be a tremendous amount of work. This may be a valid option for you! But I can say if I never need to personally ship another international package and fill out all those forms, I’ll be okay. 

We have a distributor who does all this for us. In our case, our manufacturer and distributor are the same: once products are built, they go on a shelf for order fulfillment rather than being shipped somewhere and shipped again. We like this for the sake of convenience, and for the fact that it really decreases the carbon footprint of the extra shipping step.