LIFTING THE VEIL OF SECRECY: WHY ARE GOOD 3D SCANNERS SO EXPENSIVE?
I get asked this question all the time: why are your scanners so expensive? After all, it’s just a few cameras, some electronics and a plastic casing. Does this combo really warrant a price tag equal to a Ford Focus? Well, let’s talk about it.
Reason #1: manufacturers don’t get the full amount you pay for the 3D scanner.
Most manufacturers do not sell directly to customers. Instead, they establish a distribution network across the globe, so that end-users can have local pre-sales and post-sales support in their native language close to home. THOR3D has dozens of partners around the world who promote, sell and support our products. These partners provide one-on-one demonstrations for each potential buyer, explain the pros and cons of the equipment, translate the software into your language, provide comfortable sales terms with lease and rental options, help end-users when something doesn’t seem to be working and take care of repairs when the need arises. For their work, the manufacturer generally grants a certain percentage of the end-user price to the distributor. The percentage varies greatly in the industry but generally falls between 20% and 50%.
So you bought the scanner for $15,000? The manufacturer receives on average $9,750.
Reason #2: hidden costs are built into the price of the scanner.
Aside from the hardware components that make up your 3D scanner, there are lots of expenses that go into making and marketing your device.
Warranty costs. You are buying a piece of technology. We work hard on making it reliable, but things break. It’s just a fact of life. So if every 50th scanner breaks during the warranty period, we have to fix it for free. Of course. It’s our fault. At THOR3D an average repair costs approximately $1,000. This price includes labor, cost of spare parts and shipping both ways. This means that we must build that $20 into the price of every scanner.
R&D. It takes at least 9-12 months to develop a new 3D scanner. Once it is invented, it has to be patented, then a prototype has to be created, then another 5 prototypes have to be created that improve on the original device, then it has to be field-tested, then industrial designers have to create its outer look, and then you have to apply for various certifications such as CE, FCC, etc.
Marketing. How would a customer find you if you didn’t have a website? And would your website be useful without visual content like photos and videos? So, a manufacturer would hire (at least on a part-time basis) a website designer, a photographer, a videographer, a copy writer, someone to create sample 3D scans for the gallery and of course, a marketing manager who will bring all of this content together by creating PowerPoint presentations, working with interpreters to translate the website into several languages, updating the FB and Youtube accounts, as well writing up case studies and news articles for the site.
Sales/Distribution Support. Someone has to find all those distributors and then once there is a mature sales channel and a local representative in all key territories, someone has to represent the manufacturer to each one of the partners. Each one of the dozens of resellers around the world will have questions and suggestions weekly which will need to be addressed. Can your scanner scan snow? Are you licensed in Botswana as a medical device? The scanner got stuck at customs – can you send me a new invoice with my full company name on the document?
Logistics/Administration. To create a prototype of a new 3D scanner, you have to try different components. THOR3D tries to buy everything locally, but a manufacturer shouldn’t limit itself to what is only available in their own country. The logistics department is vital to R&D. We could order our electronics from China, our durable shipping boxes from Norway and our cameras from Canada. All of those things, at one point or another, get stuck at customs or get delayed by earthquakes in the South Pacific and someone has to get on the phone and move the process along. And although admin costs add only a small fraction to the final product price, they too, have to be accounted for (office space, production facilities, taxes, accountants, internet access, coffee/tea for the break room, etc).
Software. Software development is one of the most expensive “hidden” costs. We have programmers, mathematicians, quality control technicians, calibration specialists, and optics engineers on staff. The software might be free, but the development of that software, unfortunately, is very expensive. Each manufacturer is different, and of course, the more scanners they sell, the cheaper “per unit” cost of software development is, but usually, it is one of the most expensive budget items: salaries for software development engineers.
Reason #3: low volume.
Professional 3D scanners don’t sell by the millions. Most 3D scanner manufacturers, even the most well-known and successful ones, sell by the dozens per month. In 2009, Creaform, a well-respected maker of professional 3D scanners proudly announced that they sold their 1000th unit. They’ve been selling scanners since 2005! That means that in four years they averaged 21 scanners per month world-wide. With such low volumes, it’s difficult to utilize economies of scale. Anyone familiar with manufacturing will attest that purchasing 10 units of electronics versus 10,000 units of the same thing will see costs quadruple on a “per unit” basis.
Combine all the above-mentioned expenses with low volume and you can probably conclude that your friendly, neighborhood 3D scanner manufacturer is most likely not a billionaire. It is also fair to say that even though the actual hardware components are not that pricy, the cost of developing a well-functioning, well-supported, quality 3D scanner is not as small as one might think.