Sujet Elektron story

Citation : Ask the big names in the industry and you will get the "times five" or at least "times four" figures back. That is the the final price you pay divided with the production cost. Do that exercise with the SidStation, and you end up with a product that can't be sold by any other sales channel than direct sales.

We did the restart of the SidStation and breaking our promise the old one where the last (which we honestly believed where 100% true at the time) because of two things:

1) Love for the SID-sound, and especially the SidStation sound (naturally since we made it)

2) To get some cash flow into building up the second Elektron which was silently found two years ago on the ruins of the first Elektron.

With the first Elektron "Elektron ESI" being founded with the continuous flow of money of (big) investors, the second Elektron does not have any money than it is bringing in on sales. Most figures on (both) Elektrons are public since we're a Swedish company. Not individual product figures of course.

German Keyboards magazine will be doing a coverage soon which I think will be good since it's made by a really good and gifted writer with total insight in the company. I won't dredge in the long long stories of the problems with the first Elektron, and the artistic and community visions that were the driving forces I had for the company and the investors natural and correct vision of making money in short time. To make a story short - after Elektron loosing over 3 MSEK = over 300 thousand euros most I had lost my interest and announced my goodbye (after several other people jumping off the train). That trigged the CEO to quit and Elektron was ready to follow Commodore into the grave.

The CEO was brought in after I figured I wasn't the one to bring the investors hope for big money back, and he did many good things for trying to capitalize on the investors money, but weren't so good for the Elektron that you know. None of the projects materialized, and I worked together with others hard to keep up the "real" Elektron during the focus was often on other places. It was interesting though, because during the time I got the chance to get a real insight into the MI business, having discussions with most large companies.

Anyway, after a summer of thinking it over, I negotiated and took jumped to buy Elektron into a new company despite already being worn out by the problems goign on since years in the Elektron ESI. I started with no money but ready made products. I got the chance to get more SID-chips and took it. I started the UW project without knowing if it would pay of or even being able to launch it. Of course I worked 12 hours a day without salary. I had one employee and a couple of people working freelance. Elektron employees has always been vastly underpayed, but working without any salary was tough after paying for the Elektron business and the new Elektrons initial capital. I knew though from the point I bought it that I had to put 100% in if the new Elektron was going to make it.

And believe it or not. Today Elektron Music Machines is a stable company with steadily increasing sales, although low compared to other companies, even in the small MI business. Remember though that the product development other than the UW was not payed for by the new company. Making new products from the ground up (MD and the Mono) has taken us about two years of development. The SidStation was similar but was developed mainly before Elektron started and with less people involved. Todays Elektron will need to invest its own money into products and hope they pay back. Making stuff full time is a different thing than doing it in your free time.

I spent around 6 months programming the SidStation OS. That was half before Elektron, so that was half a free time project. And indeed I was a part of the C64 and SID hacking community. I made my own music player and editor for the C64 and had Maniacs of Noise, Follin and Bjerregard ambitions. Never happened 'cause I was too late and wasn't really gifted in music making like some were. But the player was advanced, and I could never had made the SidStation without that experience. You can indeed listen to me and my friends C64 music in the HVSID collection. Ending up in the "Misc" category shows we didn't reach the fame we aspired. But I got the editor sold to the 64'er magazine after a few years when I had relised the C64 game scene were declining out of existance.

But the knowledge of the C64, SID and later console programming has been an important part of the inspiration for our music instruments, and might be one reason they are different from others. But inspiration comes from many places, other musical instruments as well of course. We do not claim to have invented the grid programming idea. However, still I think we gather inspiration from more sources than most companies. Music instruments is just one part, and to me the development has been kind of inbreeded at times, when companies just have tried to improve on others products. The "highscore" popup for writing patch names of the Machinedrum and the Monomachine is one small example of where inspiration has been taken from outside the synthesizer world.

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Sorry for dilating, back to the SID calculation:

Big number of units, place of production and production design is what brings prices down. The SidStation has everything against itself.

Making hardware commersially costs alot just in startup costs. The custom cardboard boxes is a good example. The startup cost is 3/4 of the price of making 100 boxes. To make PCB's you get roughly the same amount for 400 that you get for 100. Make 10.000 and you have 1/20's of the cost of making one 100. Same goes for most custom parts. Other components have different breaking points. 100 usually being one, 1000 being another. If you buy in 10.000 you can calculate on getting half to a fourth of the price of buying 100.

The casing was made without knowing what drives cost. It has hand welded _aluminum_ edges. The production company shakes their heads against that crazy idea. Welding aluminum is not a good idea, it takes time, you have to add material and you have to hand polish the edges. And as you might know - time is money. (Generally hand welding is time consuming, and you will find it again, although in steel for the MD and the Mono which is slightly saner, but very expensive. You probably won't find it on any other synthesizer).

We have wanted to keep the SidStation the SidStation though and has always kept everything the original design.

The 100 bonus SidStation has silently turned into 200 (made within batches of 100 to keep the bad margin. We now have around 40 left when we get out of the current production problem). That will be it, so that will put an end to the overpriced or not discussion and let the second hand market decide what it's worth.

I have to add "probably" to the "this will be it" since we already broke a promise (it hurt bad though, but my view is that it was for a good reason). We always kept to the same revision of factory new SID chips, still tuning the side components to each unique chip to get the special SidStation sound (emphased internally overdrived filter, based of the resonant filter position, that's quite unique, at least I haven't heard anything close to it) and we have not killed living C64's in the making of the SidStation (as the C64 will allways stay in my heart, butchering C64's hurts).

And sorry, I'll have to put out your hopes on "the best fucking idea" about sending in your SID - many people before have suggested it and we won't do it. The SidStation will remain the SidStation, and won't have any random SID's inside it. And we won't go into the logistic nightmare of letting people send in SID-chips (which we don't know the quality nor the required optimal external capacitors for), nor the support into having people inserting their own chips. The SidStation is not about that. The MIDIbox is already a great project for that. If that's what you want - why not go for it?

Some people seem to think it's worth to pay the price for a ready and complete music instrument, with warranty and support with the prices we are charging. Some don't, and do not buy, but please let us take the decisions on how to keep Elektron alive ourselves. We know all the figures, I promise you we don't do it for robbing people. And my question is how you can without a gun pointed at their heads.

The guy that said you need to pay the same amount in taxes as you do for salaries is correct (for low salaries). I'll add a sales tax reminder of 25% on top of the final price here as well (that makes 20% of the price you see). And 28% tax on revenues each year we make money in the company and want to save for future development.

What drives cost in the SidStation is also an ancient design. Electronics age quickly, and the SidStation was designed nine years ago. Many key components (beside the SID's) can't be bought on the open market, but has to be bought on the trading scene. It's actually a little mystery we got the original SidStation back in production at all, at any cost.

Now after knowing the final figures you can make all calculations you want. But I won't buy the "ripping off" argument. Either you buy because you think it's worth the money or you don't. We can not, nor want to, force anyone. Mind you, the SidStation second hand EBay price was above the price we set for it at the time we continued the short "extra ball" production. 1400 were made first, and there will be 1600 with the extra 200. And all of you that still feel ripped off by a synthesizer you didn't buy: It won't last for much longer at least.

We really hope Elektron will last for long though. All of us that are currently working here are living with and for what we're doing. For us Elektron is about wild ideas, making gear that inspire and an eye for details and usability (in favour of big numbers to put in your big ad and big revenues, but does nothing to the evolvement of music or music making). It might not be what brings the company to the Fortune 100, but we enjoy trying shaking the world our own way. We know the stuff we make is high priced, but are for many reasons (low volumes, costly details, complex products = long development times, after sales updates and more).

Look at Elektron and the few people there, you don't even have one single person for a job that a lot of the time is occupying a whole company. Starting with hardware R&D, continuing with an OS, finalising with casing and then the hard part of production. And then the continuing tasks of support (for new and old users), design of various types, keeping production alive and quality up (these continuous tasks take a big part of the cake) and evolvment of existing OS:es. The reason we've stayed with the current stable SID-OS is that during an upgrade we do not have memory to store the OS, so it is written directly to the flash. A failed upgrade makes the SidStation a zombie ready for a costly hard flash reprogramming.

Despite all the work we takes on few people we enjoy what we're doing in a tough business. The response from many people tells us our work over the eight years has been appreciated by more than ourselves. And if the sales of our current line is going the current right way, and the future line we have planned will become appreciated by enough people, we'll follow the current trend of growing. That would mean more products and higher volume, and hopefully a wider range, some with potentially lower price tags.

Again - think about production times mentioned and you'll understand that we (with the current size of the company) can not support releasing new products at the rate many of you expect. While developing we devote time to releasing new versions of the OS:es though, so in effect, the people who bought the first version of any of our synthesizers has gotten much more than they initially payed for. We hope to keep peoples investments intact, and not destroy them by releasing a new version that decline the previous models values. I can't promise it won't ever happen, but it's in our vision to have happy customers that do not feel they bought the wrong product at the wrong time. We think they won't be so happy investing the next time would we do so. we want any time to be a good time to buy any Elektron product.

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When you think about a production cost, do not just think in terms of components. Add startup costs, tooling (for plastics etc), direct production cost plus a revenue for future production. And for sales tax for sales to EU (25% as we're based in Sweden and are not big enough to take the costs to tax register in the different countries we sell to), import taxes to the US, and shipping... If you go for retailers the minimum margin is 20% and a reasonable is 30%. A distributor costs around 20% on top of that.

But remember that to the real production cost you have to add the development cost plus a part of the base costs of running a company like ours (mentioned above) cost divided by the number of units projected to be sold in a certain time frame.

Pricing is actually all quite complex, and the proof of doing the right pricing (on the right products iof course) is to stay in business.

I promise we do our calculations based on keeping the company healthy and in staying in business rather then, as some posters indicated, making quick money.

Daniel, Elektron


(Sorry for any spelling errors, I was writing too much and taking too much time, also meaning I don't have time to read it through

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PS. We're never cheating out on components either. The analogue audio subsystem of the MD and the Mono costs it's healthy part, but is a part of the sound. That should be more visible now with the UW. I've written about it before, but we and others get more presence and punch out of samples than we did on a computer.