[Stoves] Cost of stoves

Crispin P-P crispinpigott at gmail.com
Fri Nov 9 02:09:25 CST 2012


  Dear David

Typical worker wages in many poor countries are $200-300 a month. Informal
sector pays less. Industrial production would make a single pot metal stove
in 8-10 minutes including boxing.

Labour is thus an insignificant cost, it is material that is the major
expense.

In volume you can assume materials to be about 2/3 the marginal cost of
production and the retail price to be between 2 and 6 times the marginal
cost. Labour-intensive production can be very good if they have exactly the
right tools (which is often not the case.).

Anything you buy in North America at a store sells for about 10 times the
marginal production cost, just to give you an idea what consumer societies
pay.

Regards
Crispin

I notices a post here, where a facility employing 6-10 people coulf produce
500 stoves per month.  This means that each person can produce 50-80 stoves
per month.  Assuming a 40 hour work week (which may be too low), that means
170 hours per month or 2-3.5 hours per stove.  Assuming normal G&A expense,
(things like cost of the building and tools) and some component cost for
the stove (sheet metal costs money), would the stove not cost over 2-3.5
hours of a worker's time?  What does this say about the cost of a stove?

If a stove must sell for $X, does this imply the worker's income must be
well below $X/2 per hour since there are G&A and material costs involved?

If my analysis is incorrect, please tell me how the business can survive
with less income than expenses.  Can the worker survive with less income
than it costs him to survive?

Dave  8{)
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