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Hardware Bill of Materials (BOM) Margin Cruncher.

Models how physical product startups die by failing to mathematically separate their raw Bill of Materials (BOM) from actual Landed Cost, COGS, and Retail Net Margins.

## Hardware is Hard

Software startups can sell a $100 digital subscription with 95% gross margins because code is free to reproduce. Physical hardware requires assembling atoms. Many hardware founders look at an Alibaba supplier offering a $45 raw part and think "I'll sell it for $199! That's a 77% margin!"

### FAQ

**Q: Why do hardware kickstarters always go bankrupt?**
A: They ignore Landed Cost and Wholesale margins. That $45 raw part requires $12 in factory labor to screw together, test, and package. It requires $8 in ocean freight and US import tariffs to get from Shenzhen to Los Angeles. That brings the 'Landed Cost' to $65. Then, when they try to sell it in Best Buy, Best Buy demands a 40% retail margin. Best Buy pays the founder $119, not $199. The startup is left with $54 of actual profit, a far cry from the naive $154 they promised their investors.