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Manufactured CD's

LandlordMax Shipped CD

Up until this week, we’ve normally had our CD’s created on an as needed basis. That is to say, either we created them ourselves through the special machine we purchased, or we sometimes had a local printing shop create them. Each CD is customized to the customer, which includes your personal license code, etc. saved on the CD itself.

On average only about 10% of our customers choose to have a physical CD shipped to them. Interestingly enough, for the first year or so we were open, we didn’t even offer the option of a shipped CD with your purchase. But enough people requested it that we had a CD professionally designed which we now optionally ship. Over the last year or so as our sales have increased, where we’re now at the point where it no longer makes sense to have them manufactured in-house or even by our local printing shop.

Therefore, we’ve just ordered our first test run of 100 manufactured CD’s as a test from a larger printer/manufacturer to see how they would turn out. Although I know that ordering in larger quantities does drop the price, I’d rather pay a bit more now per CD to see how they turned out. This way in case were not fully satisfied with the end result, or even just with the manufacturer, we’re not stuck with 1000’s of bad CDs. So far I have to say I’m very impressed with the manufacturer, the CD’s look great as you can see in the image above.

I’m really happy that this initial test run succeeded so well. And it’s great to see the company growing to a stage where we now need to do CD production runs rather than one-offs! I can’t wait until we do our first full run, this time for at least a full 1000 CDs at a time!



 
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Comments:

  •     Eric
    · February 16th, 2007  · 10:01 am  · Permalink

    First of all Congratulations…

    It is great to see your company flourish.

    From someone who has known you a little while, a well deserved expansion.

    Dedication, hard work, focus, some sacrifice is paying off.

    AND in true Steph fashion: a test run
    When answering questions and helping people with solutions; Steph always says, test, test, test

  •     Ian
    · February 16th, 2007  · 10:47 am  · Permalink

    Question. Will you wait to release new versions until you’re through your inventory or will you eat the excess inventory?

  •     Steph
    · February 16th, 2007  · 11:03 am  · Permalink

    Hi Eric,

    Thanks!

    And absolutely, I’m not a do as I say not as I do guy. I actually do what I suggest other people to do 🙂

  •     Steph
    · February 16th, 2007  · 11:11 am  · Permalink

    Hi Ian,

    Great question, and it was also a big part of my considerations when moving to actual runs rather than one-offs. What I decided in the end is to have the CD manufactured (the silk printing, the inserts print, having the CD put together, etc.) but to leave the CD’s blank. By doing this I will incur an extra little cost as each CD needs to be burned at purchase time rather than being done by the manufacturer, but I figured this would more than offset the potential inventory loss in terms of time/money. For us the biggest cost was printing and putting together the CD cases (even if the local printer printed the CD labels)

    As well by having the CD’s initially blank it will remove any possible thoughts that might try to make their way into my brain to delay a release because of the inventory supply levels. That’s the last thing I’d want to do! This way I can release a new version without having to worry about losing inventory. It’s the best of both worlds!

  •     Ian
    · February 16th, 2007  · 11:34 am  · Permalink

    Ah interesting. Pretty cool and a very nice idea. I’ll definitely have to consider this if I ever offer HelpSpot on CD.

  •     Steph
    · February 16th, 2007  · 12:25 pm  · Permalink

    Hi Ian,

    If you don’t mind my suggesting based on my experience with LandlordMax, offering a CD might increase your sales somewhat. It might not be a substantial increase, but as you can see from the amount of Cd’s I’ve already purchased it’s also not negligible.

    You’re market is different than ours so I suspect the results will vary, but you might be surprised at how many people actually choose this option. For every person who requested it in the past (before we offered this option), we probably now have 5-10 people who buy the CD. I wish I could tell you by how much it increased our sales, but like you they’re too dynamic (too many variables to accurately predict which has exactly what effect).

    The other consideration is that if you look at the cost/benefit it’s a good ratio. For us, we charge pretty much the cost of shipping the CD to the customer as an extra shipping and handling charge on the purchase if they choose this option, so we don’t make any profit on the actual shipping of the CD. The profit is rather made in the fact that we’ve acquired a customer we might not have otherwise, and hopefully for a long time over many versions and upgrades!

  •     Andy Brice
    · February 27th, 2007  · 7:40 pm  · Permalink

    Steph,

    I get my CDs printed, duplicated and cello wrapped by a local duplicator 100-200 at a time. But first I make up a small batch ‘by hand’ just in case there are any undiscovered nasties in the new release.

    I’m not sure whether I will ever reach the volume where pressing from a glass master makes sense (1000+ units).

  •     Steph
    · February 27th, 2007  · 11:35 pm  · Permalink

    Hi Andy,

    I don’t know if this is applicable to you or not, so please take this advice as you wish. What we found is that if we ordered a smaller or larger run (100-200 versus 1000 for example), the total price difference wasn’t very big but the unit price definitely was. Therefore on this first pass our goal was to test the printer’s quality rather than save a few dollars.

    I also don’t know if you noticed in the article, but we only get about 10% of our orders as shipped CD’s. It’s not a large percentage, but it does add up. Now as you alluded to, you also don’t want to get stuck with a large inventory of “unusable” CD’s if you order too many at once.

    So what we did is have the CD’s printed but not burned. We found that 90+% of our time was spent on manufacturing the CD (printing, cutting, putting together, etc.), and that burning took only a small percentage of that time. In that case, the offset of the inventory cost versus the time to burn, it’s worth it for us to do the burn at purchase time (with the latest version). I talked about it in a little more detail in the thread with Ian.

    I don’t know if it’s viable for you, but I’m sure it’s worth considering.

  •     Andy Brice
    · March 1st, 2007  · 8:54 am  · Permalink

    >What we found is that if we ordered a smaller or larger run (100-200 versus 1000 for example), the total price difference wasn’t very big

    Pressing from a glass master is *much* cheaper per unit than digital duplication but there is a big up front cost for the mastering – so it only makes sense for 1000+ units.

    Making up CDs by hand is very tedious. I have also just got my printer to do a batch of 100 CDs in cases, but not duplicated and no version number on the CD. I am going to burn these myself for the first few of each new version. If there aren’t any problem then I will get a short run duplicated and cello wrapped.

    About 25% of my sales include a CD. I don’t know why that is higher than yours.

  •     Steph
    · March 1st, 2007  · 10:53 pm  · Permalink

    I absolutely agree that making CD’s by hand is tedious. Once I did all the calculations, not just the manufacturing costs, but when I also factored in the time costs, I realized it just didn’t make sense for us to do them in-house anymore. Hopefully it won’t be long before you’re doing runs in the 1000’s!

    As for the difference in percentage of CD’s, that’s very interesting… I suspect that every market has a different percentage. Probably even within an industry different companies have different percentages (depending on how you promote it on your website). Either way, it’s interesting to see.

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