Yes, my Vacuum Tube Audio SP14 ( www.tubes4hifi.com/SP14.htm ) is a $5000 preamp that I sell for $1350 (fully assembled/tested/warranty).
Here I'm going to tell you how that's possible and why it's such a great bargain (if you didn't already know).
I've been meaning to write this for 3-4 years now, but just never got around to it. But now, here it is.
My Vacuum Tube Audio business is built around VALUE, not profits.
VTA doesn't pay a Chief Executive Officer (CEO) $200,000 a year.
VTA doesn't pay a Chief Financial Officer (CFO) $125,000 a year.
VTA doesn't pay a VP of Marketing and Sales $125,000 a year.
VTA doesn't pay a Director of Human Resources $75,000 a year.
VTA doesn't pay for 4 Electronic Engineeers at $75,000 each a year ($300,000).
VTA doesn't pay for 20 electronic techs (worker bees) each at $45,000 a year ($900.000).
VTA doesn't pay $250,000 a year to rent a manufacturing warehouse
Those figures add up to just over $2 million a year, and those figures are in the ball park for a typical small manufacturing company.
I worked for five companies very similar to that during my 30+ year career.
A company like that might make 1000 pieces of a $5000 preamp each year, for $3 million in sales.
Yes, that's correct, not an error in math, they sell them to dealers at $3000 each (40% discount from retail),
so the dealer can make $2000 profit. So now you see, they make $3 million in sales, and have over $2 million in overhead,
so they are making just under $1 million in gross profit, which is pretty good, around 30%.
Of course, there are some other overhead expenses I didn't mention, let's not forget taxes and social security
to the government (around 30%) and of course ADVERTISING, medical, dental, vision, and retirement funding,
so now they are probably down to a profit of around $500,000 or around 17% of sales, right in the ballpark for a decent business.
With VTA, I do ALL of the above myself! I pay myself a flat $40K a year. I work out of a 100 sf spare bedroom in my home. I work 30-60 hours a week.
VTA pays the IRS and social security taxes of around $10K a year. My partner Bob Latino who sells amplifiers using VTA designs,
is an independent contractor who pays himself about a small commission on his sales, no cost to me, a fair payment for his work.
That $5000 preamp that dealers pay $3000 for has about $750 worth of parts in it. This I know. In fact,
if you look inside a $5000 preamp you can pretty easily figure the cost. About the same cost as my $1350 preamp.
My preamp has $800 worth of parts, $400 worth of labor, and $150 profit for me (about 10%). I can live on that.
You get the VALUE, not the marked-up price. I don't have dealers, I don't advertise (just a few free ads on ebay),
I don't have any employees (or worker bees). No secretary. Just internet, email, website, buy direct !!
I find the best sources for parts, buy in bulk to get some wholesale pricing, and you get the deal - a $5000 preamp for $1350.
Maybe later I'll take you inside some of those $5000+ preamps and show you where they cut costs on parts quality.
I've seen alot of those preamps using RCA jacks that cost $1 a PAIR. Chassis cost under $100.
My RCA jacks cost me $5 a pair, and my chassis costs almost $300.
Here I'm going to tell you how that's possible and why it's such a great bargain (if you didn't already know).
I've been meaning to write this for 3-4 years now, but just never got around to it. But now, here it is.
My Vacuum Tube Audio business is built around VALUE, not profits.
VTA doesn't pay a Chief Executive Officer (CEO) $200,000 a year.
VTA doesn't pay a Chief Financial Officer (CFO) $125,000 a year.
VTA doesn't pay a VP of Marketing and Sales $125,000 a year.
VTA doesn't pay a Director of Human Resources $75,000 a year.
VTA doesn't pay for 4 Electronic Engineeers at $75,000 each a year ($300,000).
VTA doesn't pay for 20 electronic techs (worker bees) each at $45,000 a year ($900.000).
VTA doesn't pay $250,000 a year to rent a manufacturing warehouse
Those figures add up to just over $2 million a year, and those figures are in the ball park for a typical small manufacturing company.
I worked for five companies very similar to that during my 30+ year career.
A company like that might make 1000 pieces of a $5000 preamp each year, for $3 million in sales.
Yes, that's correct, not an error in math, they sell them to dealers at $3000 each (40% discount from retail),
so the dealer can make $2000 profit. So now you see, they make $3 million in sales, and have over $2 million in overhead,
so they are making just under $1 million in gross profit, which is pretty good, around 30%.
Of course, there are some other overhead expenses I didn't mention, let's not forget taxes and social security
to the government (around 30%) and of course ADVERTISING, medical, dental, vision, and retirement funding,
so now they are probably down to a profit of around $500,000 or around 17% of sales, right in the ballpark for a decent business.
With VTA, I do ALL of the above myself! I pay myself a flat $40K a year. I work out of a 100 sf spare bedroom in my home. I work 30-60 hours a week.
VTA pays the IRS and social security taxes of around $10K a year. My partner Bob Latino who sells amplifiers using VTA designs,
is an independent contractor who pays himself about a small commission on his sales, no cost to me, a fair payment for his work.
That $5000 preamp that dealers pay $3000 for has about $750 worth of parts in it. This I know. In fact,
if you look inside a $5000 preamp you can pretty easily figure the cost. About the same cost as my $1350 preamp.
My preamp has $800 worth of parts, $400 worth of labor, and $150 profit for me (about 10%). I can live on that.
You get the VALUE, not the marked-up price. I don't have dealers, I don't advertise (just a few free ads on ebay),
I don't have any employees (or worker bees). No secretary. Just internet, email, website, buy direct !!
I find the best sources for parts, buy in bulk to get some wholesale pricing, and you get the deal - a $5000 preamp for $1350.
Maybe later I'll take you inside some of those $5000+ preamps and show you where they cut costs on parts quality.
I've seen alot of those preamps using RCA jacks that cost $1 a PAIR. Chassis cost under $100.
My RCA jacks cost me $5 a pair, and my chassis costs almost $300.
Last edited by tubes4hifi on Fri Sep 08, 2017 1:00 pm; edited 2 times in total
