Subject: Price of parts.
From: Rotary Engine
Date: 9/24/2006, 6:32 AM
To: AA-me

So far we have been trying to stuff a liquid cooling system under
cowls designed for air cooled horz opposed engines.
There are some real kludges out there with two rads and
a pile of spaghetti plumbing.
I am real excited about this new cowl. Perhaps we can find some
body that can make them and sell them. I mentioned it to
Will James but he is pretty busy.

--  Paul Lamar ...No rotor no motor.

Paul, I'd be interested in producing them if
there's enough interest.
Things are progressing on the Nc Mill, but slowly.
I'm currently
waiting on some precision machined parts which are
becoming a bottle
neck.

Anyway, we'll see if there is enough interest in
the mean time.

Jarrett

I think you would make money for years to come.
Will James charges about a $1000 I think for his cowls.
Cooling always has been a big hassle. The right cowl
would go a long way to solve that problem.
--  Paul Lamar ...No rotor no motor.

Jarret, I hope you do supply cowls. The problem is we are all
building different airplanes.  If  you could figure out a way to cope
with the endless variety, you would have a very good  business. I am
not a composite guy so this suggestion may be unworkable in reality.
But what if  you required a plywood pattern of the firewall with each
order and you already had made up the complex part of the cowl, i.e.
the nose bowl which would be the same for every rotary installation.
You could also prefab the belly scoop. Then it would be a matter of
connecting and blending blending the firewall shape to the prefab
stuff.  Or just make the nose bowl and scoop and let the builder
worry about putting the puzzle together.    I would be a customer
either way.   Perhaps you could start with just a nose bowl with all
the right openings and see how the business goes.      Jerry

Jerry, this has always been a concern when looking
at producing cowls. We know that
for the typical Rv series they are pretty close to
the same and for most models
we can inter-change between them. The issue come's
when people like youself
want a Tailwind cowl, the next guy wants a Bd4
cowl and his buddy is
building a Mustang II etc etc..  I've got some
idea's as to how to make this work
Being as my cowls molds would be built on a CNC
mill, I can easily blend
the tail section of the molds to fit various a/c
while keeping the front section
[even more than just the nose bowl] the same. As
Doc has pointed out, I think
$1000 for a cowl is a bit steep. In reality one
off cowls aren't cheap and storing
10 different cowl sets takes alot of space. A
typical production cowl mold,
when properly built, is 4ft cubed or more for the
bottom half.

I'm wondering if people would be interested is a
"fiberglass FWF package" ?
For this same price I think I can provide a
properly designed pressure recover
duct which will mate to the cowl and some standard
rad size's. If this can be
accomplished then we're starting to get closer to
a FWF package, accept our's
is more a collection of parts from different
vendors rather than just 1 company.

Pretty soon we could just produce a list of
components and where to
buy them and you'd have your entire FWF package.

Some food for thought..

Jarrett

Don't worry about the price. Speaking for myself, I don't mind
paying.   Just be fair.  The main thing is to deliver a good product
which I have a feeling you would do.   Once you establish the ability
to deliver one off FWF packages, you will have a thriving business.
When will the mill be ready?  It must be a monster to handle
something the size of a cowl.     Jerry


Absolutely right Jerry though I might add don't take deposits if you can't
deliver promptly and then deliver on schedule. A reputation for good work
and on time deliveries would justify the cost.

John

I could not agree more.

If it is about saving money or avoiding work, one should stick  with Lycoming.
The rotary is an  on going experiment for each  individual builder.
Expecting others to make stuff for  you for a  few pennies is pointless
and insulting.  You don't mind wasting  someone else's time?  What
would be their incentive?    RE the cowl.   You are not buying
fiberglass,  you are buying a finished product  which took skill,
time and investment.  Regards,  Jerry


Tracy describes the way he priced one of his offerings. He estimated
the number he would sell, computed his total cost,  and priced it
accordingly. Total cost would include a reasonable amount for labor I
assume. He doesn't talk about profit. The key is when the demand was
greater than he expected he reduced the price; he did not go for the
excess profit. I assume he re-amortized his fixed cost (designer's
time?) and probably adjusted the per unit cost for whatever economy of
scale the greater volume achieved. I see that the RD-1C is now priced
at just under $3,100. Some other vendors are offering theirs at more
than twice the price. In my opinion Tracy's is a better unit. What is
the disconnect here? (Incidentally, I think (not sure) this is a
substantial increase in price, which disappoints me not because I
think it is unjustified, but because of the total picture. The
fundamental problem is that 3K is 10% of a 30K installation. How many
pieces are there to the puzzle, and what do they all add up to? I
don't know, but I think a 30K installation is not price competitive
with the Lyc or Sube. Tracy makes a very similar statement in the
Mazda Papers. I think it will really be hard to put together a, say,
$10,000 fwf road map if **ONE** of the components is 33% of the
total.)

It is difficult to reduce the price on a given offering after the
market proves stronger than expected because it tends to make
consumers wait for the expected price reduction if the company has a
history of making such reductions; which may result in less early
demand than estimated and a subsequent loss to the producer. It also
irritates those who paid the higher price if not handled correctly.
(Incidentally this does not happen in the computer and solid state
components electronics industry. In those industries price reductions
are expected and sometimes announced in advance.)

My point about Henry Ford was to not make the mistake of
underestimating the size of the market. I did not intend to imply that
anyone was gouging or should work for pennies. I did not intend to
insult anyone. As Paul said, you may not show a profit for a few
years, but in the long run you will make more. If one covers the per
unit costs (including customary, competitive labor costs, doubled to
cover shop overhead) on the initial production runs economies of scale
over the years will make one wealthy. Provided you have faith in your
product and expect the industry segment you are in to grow. Paul noted
that Tracy and some others were doing well. I don't know about the
others, but it seems to me that Tracy followed this policy. One way of
putting the above is: cover all per unit costs now, wait for return on
investment. You won't loose money and you might wind up wealthy.

I think the aircraft piston engine market is ripe for a technological
breakthrough: the rotary with its demonstrated robustness. The
movement has a few problems left to solve and it is obviously making
progress. I believe all the problems can be solved. When the movement
can provide a road map to the average builder who also wants to fly
real soon, the market will increase dramatically. Because not every
builder can or feels able to design and fabricate his own unique
firewall forward installation or is willing to spend an extra year or
so on it. I am one of those whose FUD level was high initially; it is
much lower now. If it weren't for Paul and others like him, and the
rotary community at large as demonstrated by this newsletter, I
wouldn't even consider the rotary. The guy selling Subaru firewall
forward packages has made this abundantly clear. He has the lion's
share of the market simply because he offers a package with "all" of
the problems solved, at a price less than the Lyc. He claims over 300
sold to RVs alone! How many rotaries are flying? We need a road map.
It is not as good as a single vendor, but it would be a huge step
forward.

Also needed is increased awareness of the practicality of the rotary
by demonstrating it on a larger scale. If you are a vendor, ask your
accountant about deducting the cost of flying to as many fly-ins and
you can. You don't have to buy an expensive booth. Simply hang around
the plane with the top cowling off and a sign hung on the prop. Talk
it up. Everybody who cares enough to ask a question is a potential
customer. For myself, when (ahem!) I get my plane flying I intend to
go to every fly-in I can afford. I may or may not have something to
sell (I hope not, but the money to defray expenses would be nice.)
Maybe I could hussle the Lyc drivers by betting on a time to climb
race. :)

When turbo compounding works, the only real objection to the rotary
should disappear (BSFC).

Some day someone will do whatever is necessary to certify the rotary.
What happens to the piston engine then? Will the Mazda eat the Lyc's
lunch, economically speaking? My bet is on the rotary.

I phrased the remark about the James cowl badly. I should have noted
that the price is the same for the Lyc cowling as the rotary, but the
rotary doesn't get the "three CNC machined anodized inlet rings, and
rubber seal with seal cement." "You only get the fiberglass" was not a
put down on the fiberglass, but to point out the other goodies were
not included.

Most accountants will look at a cowl and see an object made out of
fiberglass. What is the going rate for the components? How much for
mold and design amortization? (James didn't design the rotary cowl,
maybe he has to pay a royalty.)  How much for labor? Advertising and
other overhead? Add all the costs up, add a reasonable profit and
there you are. I have trouble getting to $950. Maybe I am wrong. I
would really hate to see what I regard as the racing community price
structure hurt a budding industry. The racing community is mature and
suffers from extreme competitive disease. The guy with the best
go-fast gadget demands and gets a substantial premium over the
intrinsic value of the item other than it may win a race or allow the
purchaser to bask in reflected glory of someone who did; undeserved of
course. Simply my opinion. Your privilege to differ.

As for me I simply want a safe reliable airplane that doesn't shake
and vibrate me to the point of fatigue. Like the Lyc does. I don't
mind paying a fair price. I expect anyone in business to make a
reasonable profit. I have been and still am a small business operator.
From an Authorized Motorola Two Way Radio Repair Station, to a Mobil
gas station to a small consulting business for the last 18 years.

If the total FWF cost of the rotary is the same or greater than the
Lyc, the rotary will loose. That is the bottom line.

Doc Custer
Retired software engineer and sometime Audiologist
Building RV9-A. Fuselage

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