I'm kinda curious where the rest all goes. Seems like there's a market opportunity to streamline operations & improve efficiency if 80% of the purchase price of a product goes into things that are not the product.
There is a market opportunity and many people capitalize on it. Amazon is full of things like this. Generic items or barely designed items with your brand stuck on them, built by somebody found on Alibaba and shipped to the consumer. They're fantastically cheap, the margins are much thinner, and the products range from adequate to terrible.
It's terribly difficult to build a high quality product people will want for many years (no new design costs) which you don't have to market or do anything with and can just manufacture and sell for a tiny profit. When it is done you'll usually find it as a small very specialized family type business which hasn't sold out yet.
I would imagine things are super high tech and new, would need some iteration in their first 5 to 10 years, but after that, I don't know.
the costs that scale with each good sold is: Support, cost of returns, Sales, marketing, etc.
But who can forget the stellar recent hardware companies like Fitbit, Jambox, Sonos, and Pebble all of whom waited a minimum of 5 years before bothering to introduce a second product.
Ad from 1924.[1]
Current product brochure.[2]
Jenkins used to advertise that one from a 19th century water main had been removed because the line was being re-routed by a water utility. The valve was cleaned up and put on display, and after a while, when everybody was tired of looking at it, it was put back into inventory and went back into the ground, probably to serve another 100 years.
[1] https://s.ecrater.com/stores/260372/5725ed67b3cab_260372b.jp...
[2] http://www.cranecpe.com/chem-energy/products/valves/gate-val...
recent past
1924
More than 150 years!
"Jenkins Valves - Since 1864"
How many other electronic devices can make that claim?
If you go direct to consumer, you need to invest in building out awareness, and online and offline sales channels by yourself, which costs margin too.