Thanks for that, Radman, and thanks for the kind words everybody.
To be perfectly honest, some things sell at cost, some less, some for more than cost. Every molecule and mix is different, except that yes, we do always try to make money on the consumer products (except purchases through the newbie gift cert). As much as we value feedback and the users that give it, we couldn’t operate without consumer product sales.
We cost average everything else, and basically depend on an influx of newbies being served and served well, to help serve offer the most resources to those who give the most feedback. (so if you want to help us survive, help us introduce new members to the community! then help us grow by educating those newbies so they can give good feedback, too)
The timeline of our project and it’s financials went something like this…
We started with a palette of something like 6 or 7 molecules, and used them to make the first versions of A314 and Come Talk To Me. Sold them through several online pheromone stores. We also made some custom products for outside companies that sold under their own labels.
We did alright. These were initially made with a mix of offshore and American chemicals. The use of some key non-American molecules help keep costs more reasonable.
When we had more consumerish products than putatives and MXs, our re-investment money went up and up and up. (i.e., a growing bank account) At the time, so did our credit. Banks a few years ago used to love giving money to businesses that had cash flow. Things were looking good.
We then took that excess cash and new credit to invest in the creation of new putatives, which were almost all from costlier labs, mostly American. These widely varied in cost. Many for less than we sold 'em for, some for more. Everything cost far more than what you’d get offshore, though. Some offshore chemicals are dirt cheap relative to domestic.
Usually we never shoot for paying more than what we sell something for. It’s not like we say “ok, we want to sell something at a loss today”. It’s just that sometimes it’s inevitable if you want to try new and sometimes amazing things, while keep all customer-facing prices the same (so there’s no price bias in testing). That’s a core idea behind any R&D department after all: you lose money now, so you can make money later. It’s the same idea behind “valuing education”. Same as going to “pheromone college” as far as we’ve concerned. 
We then used those putatives we were testing and starting to stock to create the first fully dosed, easy to use chemset: The ExperiMone series. You could now mix on your skin, which would decrease your costs and help conserve some of the rarer, more precious putatives.
Skin mixing, for whatever reason, was slow to take hold. To speed things up in the name of science, we then also used those putatives build to build MXs. Besides the first truly experimental line in pheromone tech, you could consider those our first all American multi-pheromone products in a sense.
MXs are also the “high art” of the pheromone world. Things really done for the love of it. As much of a value as our ExperiMones may be (selling American chemicals at the same prices you buy Chinese elsewhere), some MXs are in the stratosphere of cost. There have been popular mixes where we lose our shirt or at least come close, “in the name of art” you could say.
We then grew tired of QCing every batch of foreign materials, and simply went all American for everything. It saved us a lot of grief, bumped up quality up tremendously, albeit at quite a hit to the pocketbook. We figured it’d work out long term, if we learned enough by doing so to create really killer products we could sell down the line to a larger audience.
I think it has been working, but with a few bumps in the road here and there. Some from unexpected outside influences.
Over a fairly short time, we went from fiscal profitability to just about break even after our costs went up and up, especially after you factored in increase attack and fraud costs. We got started to get hit hard around 2007 and it hasn’t stopped since. Parasites which zapped both time, money and now life.
Then the economy bottomed out, and all hell broke loose. We lost two important credit lines for no reason at all (we have perfect credit and always payed on time). Suppliers stopped supplying reasonably. Attacks on Androtics and myself from the peanut gallery and a few actual sociopaths grew to all time high unreasonable levels. Some normally easy to work with people went nuts under the new economy, and became hard to work with. Petroleum and chemical base stocks tripled in price. The dollar became devalued. Etc. etc.
All those added up to why you may have seen problems in our operations from time to time. There’s been quite a few times things have been “on fire” here in the background, and done our best to seem reasonably sane in the foreground while fixes were implemented.
There have been a few times we’ve bottomed out, but we’re much more stable at the moment after the single price increase we did on A314. That helped get us out of the last “daily costs more than daily income” death spiral.
Points, too, you should understand how drastic an expensive they’ve grown to be over time. I don’t know it works out like this, but it seems for awhile now we’ve been seeing only $2 in actual income for every $3 sold. I see this and gasp. I’ll have to take a more indepth look, but I’m surprised there’s so many points based sales these days. Points, technically, shouldn’t give people more than 10% off. There’s extra points for rewarding people for forum chores, sure, but I don’t think that makes up for the extra 20% or so. (maybe people are just using their saved up their points more due to the bum economy? whether it’s legit or not, it’s taking a bite out of our ability to operate)
We’ll get it all figured out. A lot of those things we just need to take a close look at and fix.
The much larger challenge is that our chemist’s operation now needs a large infusion of cash to a degree that I don’t think any price increase or business optimization will help with. Besides financial difficulties, part of his problem is that his chemists are getting old and retiring and dying. New blood is hard to by for this class of chemicals.
We have to figure all of that out (investing in our chemist and finding new talent) so our own project can continue and grow.
It’ll either be a rush to do a soft Google launch of a single product, or perhaps we’ll take on an investor or two.
We fear investors, though, since it’s a much more complex arrangement than simply getting a credit line. They usually get more than money (interest) in return. They often have quite a say in the business, which can be difficult if you don’t see eye to eye or if you have differing ethics. Some also want sort of crazy returns compared to a straight loan. Some angels might want 15x (150000%) their money back vs. 7 to 12% from a bank.
I know they have to do this because so many of their investments fail, but I don’t understand why they’d have to do that with a company that’s obviously working more than it isn’t. It’s enough to make Tony Soprano blush.
We’ll get it figured out, though. As they say, the best way around any problem is through. There’s no problem we haven’t figured out so far, except how to handle the few extra crazy crazies. That’s the most difficult to solve problem to date. We really don’t need any more sudden disruptions in forms of mass forum negging, member harassments, sudden Adwords fraud, false info injection, DDOS attacks, stalking, attacks on workers and their children, etc. Business disruption, mafia style. Nobody should have to put up with any of that crap.
