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Status: 2015-05-01

Before we start accepting down payments, we'd like to update you on our latest cost estimate and how the cost is composed. This is what we expect NeoN kits to cost in the end (not including taxes):

Items Cost
Electronic components 340 EUR
PCB assembly (SMT) 50 EUR
Mechanical components 40 EUR
Material per unit (NeoN kit) 470 EUR ±100 EUR
Testing (~5%) 25 EUR
Yield and returns (~5%) 25 EUR
R&D cost, 160 kEUR / 500 320 EUR
Loan interest ~30 kEUR / 500 60 EUR
900 EUR
Logistics and distrib. (~10%) 90 EUR
990 EUR Before taxes (VAT, etc.)
The first group of items are external costs for manufacturing the NeoN kits, which include the new PCBs, the replacement camera, the spacer frame, and the dome sheet.

You will notice that these numbers are higher than we estimated at the beginning of the project. In part, this is the result of some of the design (e.g., the camera, finding the right 1 GB memory chip, infrared, NFC, ...) in the end needing more work and turning out to be more complex than anticipated.

To a large part, the increase is due to something that took us by surprise: the Euro having depreciated significantly with respect to the US dollar, and most components being priced and having maintained their cost in USD. Today's EUR 990 would be about EUR 770 at last year's value, i.e., only a bit above our predictions.

Production is never perfect, so the boards need to be tested, which we assume will cost about 5% of the bare manufacturing cost. Some of the boards will be found faulty (yield < 100%) and cannot be sold. We may also have boards that develop problems on their way to the customer, so there could be some returns. All this would be another 5% of the bare fabrication cost.

We then have a number of fixed costs that are spread over all orders. We estimate that the total R&D cost (more about this below) until that point will amount to 160 kEUR, so that's 320 EUR per device if we assume 500 orders.

The loans will produce an interest of about 30 kEUR, which is also shared by all orders. Last but not least, we estimate that we will need a margin of about 10% for logistics and distribution.

This yields a net price, before taxes, of about EUR 990, from which the respective customer's loan and loan interest are deduced.

Taxes depend on where the order is shipped: within the EU this would be VAT and directly charged by Neo900 UG. Outside the EU, Neo900 UG does not charge taxes, but the recipient may have to pay customs fees and whatever local taxes apply.

The R&D cost consists of subsistence for Joerg and Werner, what we pay GDC to design and build the prototypes, purchases of lab equipment and materials, certification cost, and assorted minor expenses.

"Subsistence" means that we work considerably below industry rates this far. If the project sells at least 1500 units, we'll be roughly on par with what we would have earned had we just taken a regular job during the time.

This budget calculation assumes that the project will end with a "black zero" (no profits but at least no unpaid debts either) if we get 500 orders. If there are more orders, there will be a profit, which will be paid to the project team members.