Arc-LS, why so expensive???

I don't mean to offend anyone w/ this post, but I'm just curious why the upcoming Arc-LS is so expensive? The LS LEDs themselves are only $14, so why is the flashlight head alone $50? I don't doubt it will be a quality product, but my LW4000 was only $50 for the whole thing. Again, I'm not trying to slam on the manufacturer of this product in any way, I'd just appreciate an explanation of the price point.

Oh! I guess you where referring to me... Let me see if I can answer your question.

The way we arrive at the price is to start by calculating what it costs us to produce the light. This can be divided into 5 catagories:

R&D (amortized)

- Housing Drawings
- Proof machining (typically done by hand, the 5 Arc-LS prototypes already cost over $1k in machining alone)
- Electronic proofs (hand made populated PCB's, extensively tested, the Arc-LS had over half a dozen circuit variations and multiple boards made of each variation- especially the better ones)
- Production board PCB layout ("gerbers")

Up front Costs
- CNC programming (typically programming can take all day at a shop rate of $60/hour)
- CNC tooling (often, as we have found, special tools have to be ordered or hand made)
- PCB solder mask screens ($550)
- PCB mill programing
- PNP programming
- Anodize masking jigs (very pricey, the Arc-AAA was easy and only cost $500, the LS will have several times as many masking components)
- Other jigs and custom fixtures

Note: some of the above costs re-occur each time we make a revision improvement.

Re-Occuring Costs

- Labor
- Aluminum stock
- machining ($60/hour for the machine to run)
- anodizing
- laser inscription
- PCB's (drilling, plating, etching, etc)
- PCB milling (no more lasers!)
- Electronic parts (including LED)
- module assembly
- final assembly
- testing
- dressings
- Intercontractor courier fees, shipping
- Shrinkage (mostly mistakes or a single defective part taking out an entire assembly)

Occasional Costs

- CNC setup (loading stock/program/tools/etc)
- Contractor training

Promotional Costs

- Web site
- Search engine placement
- Artwork, photographs
- Collateral paperwork
- Packaging
- Distributor/wholesaler markup
- Samples

So finally, we arrive at the "list price". Typically the distributors will sell at this price initially but then (at their choosing) sell the product at a price less than "list".

This basically is the model that most manufacturers use.

Peter Gransee

Think about it: there was likely very little R&D costs on the LightWave 4000. By now, it's almost old technology. 3 D cells, and 10 white LED's. But Lightwave already has a vast customer base, much bigger than the Arc Light has. Lots of people who already own the LW2000 will, or already have, bought a LW4000. But Arc has been doing extensive R&D on the LS LED. The Arc-LS started out as the LS-5, with 5 white LED's. That would likely have been much less expensive to develop and get on the market. But the new Luxeon Star comes along, and all the previous work on the 5 LED model goes out the window. Now, the members of the forum are essentially making many changes to the design of the Arc-LS while it's under development. Everyone has been solicited for input, and Arc is, for all practical purposes, building the Arc-LS to candlepowerforum.com specs. We want hard anodized finish, and completely waterproof, not just water resistant. And some people think lithium 123's are the way to go, while others want to use the less expensive AA's All this R&D costs a *lot* of money. People with PhD's in electrical engineering, trying to get the last mcd out of the LS LED. And all of the people with PhD's in mechanical engineering, working on the design of the case. And on, and on, and on. The Arc-5 could have been shipping several months ago, and it would sell for less, and likely sell a lot of flashlights. But, due to the demands made by we forum members, odds are that the Arc-LS isn't going to appeal to as many people as the Arc-5 would have. Part of this is going to be due to cost, of course. I know we're going to like it. But will the general public buy lots of them? Hard to say. But let's look at the Lightwave 2000 when it came out: 4 white LED's. Relatively inexpensive plastic case and bezel. Quite inexpensive to manufacture; no expensive microcircuit boards, like the tiny Arc Light has, but it sold for $30, everywhere. Compared to the design of the Arc Light, or the Arc-LS, designing the Lightwave 2000 was downright cheap. No hard anodized, knurled aluminum on it, but just 4 white LED's, in an injection moulded case. Cheap to make. There's probably more profit in the LW 2000, when it was introduced, than there will be in the Arc-LS. All the tooling to make the aluminum components has to be made; and the Arc-LS, with it's circuitry, will be expensive to manufacture. I worked in a sheet metal factory when I was in college, and I watched what it took to make a simple, sheetmetal part. The tool and die maker would spend days making the tooling, and it didn't always work the way it was supposed to. Once the tooling was made, and the bugs worked out, only then could it be put into production. And that was working from a customer's blueprint, to make the simplest of stamped, sheetmetal parts, such as a fuse box, or a bracket, etc. They had maybe 4 or 5 manufacturing steps to make it. Think what it's goint to take to make the Arc-LS, from the manufacture's point of view, and it's easy to see why it's so expensive. Look at a SureFire flashlight; even the most basic 6P costs arount $60, and it's nowhere near as complex as the Arc-LS is going to be. All SureFire has to do is announce a new flashlight, and give the specs, and people line up to buy it. Look how long it's taking just to get the reduced power lamp for the E2 into production. As soon as it's in production, it's going to be hard to get for months. I could go on and on, but Peter can fill in all the things I've likely missed.

Jake,

How much do you know about the Arc's background?
You know they use step-up circuitry, as opposed to a resistor, to control the LED, right?

I wasn't sure how much knew about them. Thought that may have been the obvious answer. If not, then Peter and Gandalf have thoroughly covered it already.

I guess they must have either miscalculated the costs for production or must have gotten some additional unanticipated expenses because the price has just jumped up.

Instead of $80 for everything its now close to $100. That might be a little too much light for me. I guess I'll just have to see. I hope I'm not forced just to stick with a LS mod.

Yes, for the head alone is $68. that is a bit too much! Maybe this is NOT a MASS production, so the cost is high!

Andy

Not sure if you have read the thread in the manufacturer's forum. It's no big deal, but if you remember, the reason the cost went up is that we changed the design and added features that CPF members requested.

Peter Gransee

Thanks to all who replied, especially Gransee! Things are crystal clear now. Oh, and I'm sure I'll still buy one.

Well, I don't understand, (among many other things), why the Arc aaa is cheaper at Brightguy than the Arcflashlight website.. and Peter G. won't match the lower price..is the logic that if people don't know about the lower BG price, they're just out of luck?

It is disapointing the price must be so high. But...would we have really been happy with the original design and a lower price?

We wanted a more powerfull and expensive step-up...even if it meant sacrificing long run time.

We wanted a paint that would give Surefire durability.

I think all of us want one...some of us may not be able to afford one right now...and the decistion to get one can be made later if getting one with serial numbers is not that important...I felt they might be worth more someday as collectors items and I could sell it and pay a cute nurse to sit on my lap while changing my IV drip bag...for a little thill in my old age.


Ken...the perfect speller

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Ted the Led:
Well, I don't understand, (among many other things), why the Arc aaa is cheaper at Brightguy than the Arcflashlight website.. and Peter G. won't match the lower price..is the logic that if people don't know about the lower BG price, they're just out of luck?<HR></BLOCKQUOTE>

Hi Ted...this is normal practice among companies...if I want you to buy/sell my feminine higene products...Ted says "well why should people buy from me when they can buy from you" and I say "because you can sell for the same price or less as I will not undercut you...my price will stay the same, $10.00 for each...er, hair coloring, but I sell them to you $100.00 for twenty...so you can sell them for $2.50 less than me and still make a profit...so your investment is protected.

This is how I can give you a fair shot at making a profit from buying product from me.

Ken

Folks,

Between what R&D costs are and what we "demanded" - we will get what we pay for. Bottomline......

Im a bit surprized at the sort of negative responces out here. I have no background in the sciences but I have as a hobby studied economics and liked it so much that I went ahead and got degrees in Finance, Economics, and Accounting. Do people actually wonder why when the first VCR's came out that they were so expensive? How about CD players? We have been witness to something being done that has not been done before. I actually have wondered how a small operation like this has been able to do what it has. Remember, technology is often pushed by niche players and it costs. Also, when we push the quality or performance envelope, we reach diminishing returns. I once wondered why I paid $600 for a light weight high performance sleeping bag and why everyone else doing what I was insisted on it. When I woke up with icicles inside the tent and I was laying in water yes inside the bag, I was dry and warm, I understood. I understand the price, I do hope that the Grancee continues with this project. I am a user not a collector and I can't wait for this product. I would be willing to pay double what he is asking for one of these. I have long been looking for an efficient light utilizing a single lithium 123 with no luck. Yes there is the E1, I have three of them, not efficient enough. Grancee, stick to the path, others who have gone down this road in other fields have had to face the slings and arrows also.

Thanks for the good posts. JohnSidneyB is right on track.

I used to feel quite differently about distributors. But I did the math and realized they actually helped the customer.

I am an idealist (just look at our designs). Sometimes not enough of a realist. Without writing a long piece on economics, may I say the following:

1. If you are going to buy an Arc flashlight, buy from our distributors please. You will get a lower price, better service (it's what they do) and sometimes they have more stock than we do, so your order is usally filled more quickly. We already encourage people to use our distributors on our website by showing links to them before showing our prices.

2. Distributors help lower our costs and share in our risks. I see the discounts that they require as mostly a promotional charge. Promotion usally makes up the largest part of any "list price". Ultimately, with distributors in the mix, the price you pay is lower.

Peter Gransee

p.s. Some may still wonder about the whole list price/distributor price mystery. This is an economics question. If you really want to know, I or somebody else here much better qualified could write a piece on it.

Part of what is happening here from an economics point of view is comparative advantage, it would become a 500 page post real quickly to give the ends and outs of this but it is one of the reasons why we don't want Arc to play the role of distributer. I anyone really wants to understand this, do a search on David Riccardo comparative advantage. This should not be confused with absolute advantage from the Wealth of Nations. Some might jump in and say this is a marketing issue, it is that as well. Marketing will tell you what it is, Economics will tell you its implications. The risk sharing is both Finance and Economics and deals with the concepts of expected value which can eventually lead to the acuarial sciences. Brush up on your finite math and calculas before going down this road. Arc may be able to play the role of distributer but by using a retailer, both he can save time and money, the retailer can make money, while at the same time we can save money. If this were not true, it would be rational that companies could deal direct cut out the middle man and make more money and get more volume off of a lower price, unfortunately this is not efficient. If somehow Arc became a giant company, it could become that the only retailers that he could effeciently deal with would be huge and he would be economically be forced to deal mainly with wholesalers. I don't think anyone in the high end flashlight game is going to get that big.

Sorry, a bit more. Manufacturers specialize in bring raw materials and parts into finished products, anything else that they do takes them away from what they are doing. The smaller the companies market base, the more specialized they must become. Some services are hard to provide due to economies of scale.

Retailers can generally do a better job of distributing due to the infratructure the create. The job of retailing is a full time occupation with great investments in efficiency that few manufactures can make. Even if a company can afford to due both, it is usually not a wise idea to do so. If the manufacturer tries to due so, the capital taken away from development can allow a competitor to use this opportunity to improve and take market share. One of the retailers advantages is is that he is dealing with a large number of items from different companies. It is usually not much of a cost burden to add one more product to the line. A manufacturer of one product has to build the same infrustructure for one product if is to retail efficiently and he can never actually do it well since people tend to shop where many similar or complementory products are available.
Gransee is doing a wonderfull job, be nice to him.

That was a great summary of the economic realities.

Here's some food for thought...

Arc is already successfully serving one niche market. They are about to open another. One is on the lower end, the other at the higher end.

In my little, pea brain, the comments about pricing made here so far prove the accuracy of Arc's marketing focus.

Let me put it another way ...

Their sports car is a success.
Their luxury SUV is in testing.

The demand for family sedans is being satisfied by mass marketers.

Arc is doing EXACTLY what it needs to in this marketplace.

I'd be willing to wager the folks at Arc also recognize the call posters have made here for a mid-priced product. Don't be surprised if some day in the future they find a niche solution in that segment, too.

A tip of my hat to Arc for their foresight and dedication to quality. I look forward to learning what they have up their sleeves to follow the Arc LS with!

Mark

Thank you Luffokc. JonSidneyB, you seem to know economics to me, thanks for the write up.

I don't feel like anyone was being mean. I like good questions, and that's all I have seen. I am constantly amazed what a civil forum this is. Some forums out there- you just cannot have an intelligent exchange. The CPF is an exception and I am priveledged to constribute in some small way.

I know every product has its 15 minutes of fame. Then, either people forget about it or they compare new products to it. I find myself saying things like, "brighter than a Infinity, more cost effective than a Photon", etc. Soon, company xyz will come out with their nuclear key chain light and then people might say, "remember the Arc-AAA" or "brighter than the Arc-AAA". Oh well, no biggy. Then again, maybe it won't happen because we will constantly be able to come out with something new.

I like to remember what Merlin told Arthur when he was about to meet Lancelot, "there is always someone out there a little bit smarter than you". I am reminded of that everytime I think I can rest on our current designs. We are too young of a company, the big guys could easily come in here and make a distant memory of us.

Rather than being a one-hit wonder, I would rather we could partner with the flashlight community for the long haul. Not the glitziest, not the biggest, but always there with a good design.

So we work on our passion; which is flashlights. We relentlessly improve the Arc-AAA and we charge forward with the Arc-LS. And after that.... Well, you will just have to see!

Peter Gransee

hey Gransee,
i know i said before that your arc-ls was too expensive but,i did not realize what i was getting.i was getting an extremely well thought out lite which no one else has to offer with cutting edge technology and built with consumer input in mind.

kudos to you Gransee and thank you for listening to us and letting us help you make it possible!

I'm afraid I must agree with Jonesy and APW, the escalating cost is placing a damper on my initial interest in this light. Coolness factor aside, I cannot justify spending $80-$90 for a pocket light. Just out of my league, I guess.

Regards,

Ed