19 Replies Latest reply on Jun 14, 2012 2:54 PM by cpachris_1969

    Building vs. Buying Desktop

    MatthewsM7 Level 1

      How much money would I actually save building my own desktop vs. buying one? I am leaning towards just buying one from someone.

       

      What is the popular opinion as far as who to buy a desktop from?

       

      I am looking for a decent machine that I can smoothly edit DSLR footage on and take advantage of PP (mercury engine, etc), AE, decent graphics card, ram, and hard drive configuration.... I am also looking for the best bang for my buck! (poor college student)

       

      Thanks.

        • 1. Re: Building vs. Buying Desktop
          Harm Millaard Level 7

          This firm gets high notes from a lot of people here: http://www.adkvideoediting.com/

           

          Of course you are much better off in terms of $$$ if you build yourself, but the downside is you need to select all components yourself and have to do your own support. For considerations, see Adobe Forums: Planning / building a new system. Part 1

          • 2. Re: Building vs. Buying Desktop
            MatthewsM7 Level 1

            Thanks Harm

             

            Just curious, can you give me a ball park estimate of how much, for instance, ADK, profits from a purchase? (How much am I giving to them for support/building the machine)?  Perhaps it is worth the frustration of selecting the right components/being my own support?

            • 3. Re: Building vs. Buying Desktop
              John T Smith Adobe Community Professional & MVP

              Not Harm, but my GUESS is that no private company will give out that kind of information

              • 4. Re: Building vs. Buying Desktop
                Harm Millaard Level 7

                Matthew,

                 

                I have no idea, since I have no insight in their component costs or the rebates they get from suppliers in contrast to what we consumers have to pay at every street corner. Sure they make a profit on each system, otherwise they have no reason for existence. Did you have a look at Adobe Forums: What PC to build? An update...

                 

                I truly believe that Dell, HP, Alienware, and other brand names deliver less BFTB (bang-for-the-buck) for a video editing system than ADK. Their base price for a standard system may be lower than ADK, but when you add components that you really need for a good editing system, these brand names steal you blind and ADK knows what they are talking about. You can -with their help- configure a system that exactly meets your needs within your budget and get terrific after sales support at a price that is very competitive.

                 

                The fact remains that DIY is less costly, but you have to do it all yourself and that is not everybody's taste or inclination.

                • 5. Re: Building vs. Buying Desktop
                  ECBowen Most Valuable Participant

                  Believe it or not John, Scott gave me permission to post/publish this info since we honestly get this question all the time. Many times people want to know why the difference in price between what they can buy via E-tailers to build themselves or via a friend versus buying a prebuilt system with centralized support and warranty. Maybe this will give all a better understanding why all of the turnkey system configurators price the solutions the way we all do.

                   

                  The standard profit margin on one of our systems before any bills and costs is 25 to 30%. Laptops are less since we have less control over the cost of the shells versus Desktop/workstation components. Keep in mind that is before any bills are paid including employee labor. This is the breakdown of costs from that 25 to 30%:

                   

                  Payroll: (employees only) 11%

                  Outgoing Freight: 2.7%

                  Merchant fees: 2.8% (credit card fees) 

                  Inventory write off: (rma’s, discontinued, damaged etc) 2.1%

                  Overhead: rent, electric, phones etc. 2.2%

                  Insurance: employee and biz .6%

                  Office expenses: .5%

                  Marketing .1% (websites)

                   

                  Profit 6% on average.

                   

                  Out of the 6% Taxes are paid at the end of the year.

                   

                  The total Profit after all the bills are paid and before taxes is 6% on average. As you can see this is not a large portion of the amount paid for the system or laptop. However this is the margin we have to work with for future capital improvements/upgrades to the company and also cost increases if backend costs for support rise. Lifetime support is lifetime so that cost will fluctuate over time and we have many clients who take advantage of it even if it's to consult on studio/gear changes. I hope that helps people understand what they are paying for when they buy a prebuilt system versus building themselves. Keep in mind many PC component E-tailers sell product at a few dollar margin due to market pressures and with sheer volume numbers providing the overall profit.

                   

                  Eric

                  ADK

                  • 6. Re: Building vs. Buying Desktop
                    VideoShui

                    Most companies need at least 30% gross margin to stay in business. As the numbers ADK provide shows, much of what is left is eaten up quickly with labor, SG&A and taxes. Those companies that can make it on less than 20% either have scale, are subsidized, philanthropies, or have some other unusual situation like extremely low fixed costs or labor.

                     

                    Eric,

                    I'm impressed that ADK would share their numbers. This is, as John mentioned, unusual for a private company.

                     

                    A few things stand out in your numbers. First, it looks like you are a relatively well run company. Second, your marketing budget is absurdly low. Third, your merchant fees eat up a shocking amount of your total SG&A costs.

                     

                    I don't know your payment mix, but if the number you present is a weighted average it suggests that either you are 1) paying 4-5% merchant fees for part of your transactions (with checks probably being the balance) or 2) all your transactions are credit card based.

                     

                    If its the former, you can probably find a better merchant services provider. If the latter, which I suspect, you might consider trying to move part of your customer base to check or ACH. In fact, I'd suggest a goal to get half of the customer base to a non-CC form of payment. This would add 1.4% to your margins and take an incredible 14% cost out of your SG&A!

                     

                    What should you do with the money? Only your company can answer that question. I don't know your firm or your industry, but here is what I would suggest as a starting point:

                     

                    Put part of the money into marketing. Hire someone who really knows marketing to help explain what your company does and why it does it. If you don't know already, figure out your emerging growth customer segments. I suspect you know your present customers pretty well, but if you want new ones, you'll need to explain simply the value you deliver. This means you need to know them well.

                     

                    Your website appears to be currently targeted to customers who already know what they are doing (and there is nothing wrong with this). However, it is hard for those who don't know the industry, such as the original poster and myself to figure out your company's value proposition. I suspect that you know well the value your company delivers, but that message is not clearly communicated in a way a non-specialist would understand.

                     

                    For example, "Why does upgrading the RAM from 16GB to 32 GB cost so much money?" is probably a question you get alot. Many people who are looking at boutique expect to see some, maybe 10-20% markup over ordinary retail, but a lot more than that is bound to create questions.

                     

                    There is probably a good reason for your pricing approach, but your configuration utility doesn't give the prospective buyer a clue. Don't make them call you to figure it out, since most won't bother. Better yet, present your systems so you don't have to answer that question.

                     

                    At the end of the day, if you want new entry level customers you'll have to convincingly answer, on the first page of the website, the question: "Why should I buy a system from ADK when I can get a similarly configured system from CompetitorX for $1500 less?" You cannot require them to read a half dozen pages to figure it out.

                     

                    For best results, answer it in 30 seconds.

                     

                     

                     

                    Message was edited by: VideoShui

                    • 7. Re: Building vs. Buying Desktop
                      Scott Chichelli Level 3

                      Hi,

                      thanks for the reply. i have always tried to be as transparent as possible.

                      Eric left out a good chunk of what what happens with labor. i think people have this idea we slap a bunch of parts together and ship it. here is a good look at how a system is processed and the labor behind it.

                      if we could do what most box builders do (remove the testing/installing/support etc) our labor would be much less.

                       

                      in order of how it happens

                       

                      Sales Rep (often the same guy who QA's)

                      Order processing

                      Parts pulled and put into the line up

                      System builder, on average a builder builds 7-10 systems a week (we have 3 full time plus others who can jump in) sytem is burned in tested/benchmarked

                      QA this is where hardware and software are installed system is checked for integrity, tweaks etc burned in again, benchmarked actual footage ingested/edited looped back

                      Shipping/receiving

                      Support

                      Repair (rare but it happens) about 12-20 a yr out of about1200ish

                      Building upkeep  (cleaning etc)

                       

                       

                      now to answer your post.

                       

                      Marketing budget: lol there is none. word of mouth is by far the best advertising a person can have. i have never liked advertising nor seen it work very well. add to that we are not "marketing" people. we are computer geeks.

                      i spent a small fortune a few yrs ago running full page ads in a video editing mag. $3000 for the back page and $2000 for inside. i did it for 11 months i think maybe 10. it was the one and only time i ever did print addvertising and i wont ever do it again. the number of sales didnt even pay for the advertising. At best if was an exrecise in branding? (or bleeding money)

                       

                      we come up really well in google searches (real not paid for) been down that road as well. used to spend $1000+ a month on google ads until i realized we were showing up in real searches at or close to the top along with the paid ones..

                      yet so few people find us.

                      The other side to this is i dont really want to grow this company too fast or for that matter too big. Big means you start to lose sight of whats inportant (the client) and enjoying your job.

                      Years ago i knew every clients name and often something about them, now orders come accross my desk (yes i see every one) and i have no clue who they are, what they do etc. its nice to grow but i do like that personal touch.

                       

                       

                      Our website is basically our advertisement. I am pretty much the one who does all that (you can see i am not the best at it) and i dont like doing "marketing glitz" (drool factor if you will)

                      i do have some very smart employees who are far better at graphics/photoshop/AE than i am thank goodness.. but have yet to really get them working at it.

                       

                      on the front page there is a link "why Us?" http://www.adkvideoediting.com/whybuy.cfm

                       

                      seems you missed it like like most do. i can tell as when i inform a client we will install your Decklink card and Adobe software (that you already own) for free they usually are shocked.

                       

                       

                      we have agonized over the main front page for yrs and how to present.. untold make overs since 98, had flash got rid of flash etc etc.

                       

                      its hard to market to the beginner, to the higher end clients plus Govt/EDU and still show we sell more than just computers.. not sure we will ever find the right balance.

                      i do think of our competition for NLE systems we do have the best site and its easy to navigate.

                      no one has the system configurators we have with the options we have.

                       

                      i have talked to a few marketing people and no one gets what we do! not enough to convice me to spend $

                       

                       

                      Credit card Fees: yeah its just part of doing biz. the average is 4% anymore. you know all those rewards cards you have (i got em too) well guess who pays for your rewards. it aint the bank!

                      95% of our individual or small corp clients pay by CC. the vast majority of Govt/EDU large corp pay by check/ACH and takes forever to pay up!

                      thus why the CC fees are not a straight 4% or higher. BTW card present vs internet/phone order sales the CC fees are double. we rarely have someone here in person.

                       

                      more on marketing. we bought out a competitor for audio over 3 yrs ago. on that site he sold a product (very few options) vs our very advanced and often very overwhelming system configurators.

                      it was interesting to see how that site reached people that adk pro audio could not. we have now since shut it down. but there were definately 2 types of clients

                       

                      one who wants to be told buy this and others who want options..

                       

                      we have often talked about a dual site where you simply are asked do you want to configure a system or buy a pre built..

                      in fact at one point we offered that,  there was a buy button (basic default config) and the customize button.

                      very rarely did we get an order with the simple buy button..

                       

                      one of the things i have been after Eric about for yrs is writing pages of why this over that and how to do this..

                      why more memory is needed for AE, etc,etc

                      (like he has any spare time).

                       

                       

                      as to the why is 32gig so much more, aside from the OP asking i dont think we get that often. it has to do with memory compaitiblity with X79 and 8 gig sticks that work are not cheap..

                      we use the same 8 gig sticks on the Z77. trying to not stock 2 types of memory..

                       

                      sadly your post has touched upeon something that has driven us crazy for a long time.

                       

                      Scott

                      ADK

                      • 8. Re: Building vs. Buying Desktop
                        VideoShui Level 1

                        Thanks for the detailed reply. You are right, the credit card industry is brutal and few people understand the true cost using a credit card. It is unfortunate there are few alternatives for some businesses. Even so, I've seem some businesses do some creative stuff to get around it and still get paid on time.

                         

                        Interestingly enough, I did not miss the "Why Us" link at the bottom. However, I suspect many do. To find it, I had to scroll down the screen of my laptop. Many users will not, nor will they read a full page of dense text, but perhaps your targeted demographic will.

                         

                        I would agree that paid ads and search are generally not good uses of marketing dollars. Advertising is only one very small part of marketing, although it gets the most attention. The best use of marketing resources is really in developing the marketing strategy, customer segmentation/demographics and alignment of messages to the specific segments.

                         

                        One option I've seen other boutique business use to address the marketing issue is to have the principals take an introductory marketing course at a local university. They found that even if they don't like marketing, learning a bit more than the basics is extremely helpful (and cheaper than hiring an outsider). The best courses require a project relating to the development of a marketing plan. They use their company for the plan and end up getting some feedback from the instructor for the relatively low cost of the tuition. Plus, they get many of the necessary tools themselves.

                         

                        I know it was unsolicited advice, but I appreciated you taking the time to post information about your company, so I took a little time to look at your site. Those were my initial reactions, so if they don't resonate with you then please ignore them.

                         

                        Best of luck!

                         

                        Message was edited by: VideoShui

                        • 9. Re: Building vs. Buying Desktop
                          jamesp2 Level 1

                          Note that there's another alternative to buying from an integrator like ADK or buying a workstation from HP or Dell.

                           

                          There are computer builders who will put a custom system together for about the same price you'd pay for components, plus maybe a premium of 10% and a small fee for getting everything up and running and burning the system in.  This will be a significant savings over what ADK can deliver for (30-40%), but of course you'll get no support for running NLE applications, and installation of software and tuning of the system is for you to do.

                           

                          However, you're not any worse off than you would be buying a workstation, and by picking your own processor and components, you may get a better deal and performance.

                          • 10. Re: Building vs. Buying Desktop
                            ECBowen Most Valuable Participant

                            This is where the difference in integrators or configurators really begins to show. Ask yourself the following questions when looking at different pre-built options. Keep in mind this is assuming the editor does not have the technical expertise, confidence, or time to handle these themselves.

                             

                            1. How much testing have they done with the components used or recommended and why do they recommend them? If you request certain hardware outside their scope or configuration is there a reason specific to your requirements?

                            2. Is the integrator aware of known compatibility issues and resolutions that save you considerable wasted amount of troubleshooting time before they happen?

                            3. What is the level of support offered with the system and when/where does it stop? This is often the most contested subject because of the common manufacturer B is at fault call them. Then when you call manufacturer B they say manufacturer A is at fault call them. How do you get resolution to your problem in this scenario.

                            4. What is the level of technical expertise at the initial contact of sales or support?

                            5. What is the timeframe for support escalation?

                            6. What is the commitment to customer resolution of issues?

                            7. How often do you speak to the same support staff so as to avoid lengthy delays to resolution and negative impact on your business.

                            8. What is the loss to business or impact on reputation by delays or loss in production? How does the support of the integrator minimize that?

                            9. What is the over all level of confidence you have with integrator or system builder that they honestly know your situation, workflow requirements, and support needs before, during, and after the sale.

                            Finally -  If everything goes well without issues or failure, what is the premium cost paid to the integrator or system builder. Is that amount greater than the loss due to support issues, hardware failures, or delays over time or per incident.

                             

                            Hope that helps clarify distinctions.

                             

                            Eric

                            ADK

                            • 11. Re: Building vs. Buying Desktop
                              VideoShui Level 1

                              That is a great post Eric.

                               

                              You guys know the value of what you provide. Can you take that list, distill it down, present it clearly in a way that a non-specialist can understand in 30 seconds?

                               

                              For example: Point 8 seems to be the critical one that sums up the all the rest. It is what you might consider leading with, not have it buried next to last in a list of nine. The rest of the points are all examples and commentary on your main point.

                              • 12. Re: Building vs. Buying Desktop
                                ECBowen Most Valuable Participant

                                I understand your point and will have to think about it. The list is based on the most common questions and or feedback of various system builders or integrators by clients. The idea is to generate enough detail to draw specific distinctions. Questions 1 through 7 help answer 8 which combined help answer 9. The last question is simply the overall cost involved and is it really worth it. Thanks for your feed back and I will see if I can simplify it.

                                 

                                Eric

                                ADK

                                • 13. Re: Building vs. Buying Desktop
                                  VideoShui Level 1

                                  There is nothing wrong with your list, it is very good and obviously based on your deep knowledge of the industry. It is also formated as we are all taught in our education system. The irony is that most consumers actually reverse the process, requiring a slightly different approach in marketing. This approach is almost never taught outside of certain business fields.

                                   

                                  Good luck, you guys have a nice company.

                                  • 14. Re: Building vs. Buying Desktop
                                    Jay Knobbe Level 1

                                    The definition of a "better deal" means something different to everyone. Does the lowest possible price = better deal? Or does having your computer perform at peak performance = better deal?

                                     

                                    I built my own but I would be afraid to tally up the hours I spent searching and reading this forum, reading reviews, ordering, returning, ordering again, etc. Not to mention wondering if I made the right choice. I did enjoy the process of educationg myself about something I knew very little about, assembling the components, etc. Would I do it again? No. I'd rather spend my time filming, editing, etc.

                                    A side note: Since my nature is to go overkill, I built a large system with a 1200w PSU. Guess what? UPS's that can handle that kind of power don't come cheap AND I ended up hiring an electrician to run 20a service to a new outlet. My "deal" flew out the window at that very moment. Eric taught me that one.

                                     

                                    99 times out of 100 the concept of a better deal based on cheaper price fades fast the first time there is a problem. If something goes wrong with my machine, who do I call? Myself? And spend hours trying to figure out some obscure error code or why suddenly I get a BSOD? I could be editing footage instead.

                                     

                                    The fact that guys like Eric and Scott freely share their knowledge on this forum speaks loudly to the type of company they have.

                                     

                                    And BTW, when did it become the consumers business to know how much money a company earns every time they sell a computer? or a dishwasher or camera?

                                     

                                    I don't mean to sound snarky. I thought I would share my experience and opinion for what it's worth.

                                     

                                    Message was edited by: Jay Knobbe

                                    • 15. Re: Building vs. Buying Desktop
                                      Peru Bob Adobe Community Professional & MVP

                                      Jay Knobbe wrote:

                                       

                                      The definition of a "better deal" means something different to everyone. Does the lowest possible price = better deal? Or does having your computer perform at peak performance = better deal?

                                       

                                       

                                      This discussion reminds me of one of my favorite jokes that illustrates the value of a person's knowledge and experience:

                                       

                                       

                                       

                                      A factory has a major problem that closed their manufacturing line.

                                      A consultant is brought in. The Consultant wanders around the factory

                                      floor, listening, poking. Finally, he takes out a small hammer and taps

                                      gently a few times on one particular piece of machinery.  The factory line

                                      roars back to life, production once again in progress.  The factory

                                      managers are ecstatic.

                                       

                                        A week later, the factory receives the invoice from The Consultant. 

                                      The price was $900 for less than one hour of work.  The factory's business

                                      people fumed and asked The Consultant for an explanation.

                                        The Consultant offered to send in an itemized invoice. The business

                                      people said, "yes, please do."

                                       

                                        A second invoice arrived.  It had two line items. 

                                      Item 1 was, "Rectifying Problem with Hammer Hit...$1"  

                                      Item 2 was, "Knowing Where to Hit the Hammer...$899"

                                      • 16. Re: Building vs. Buying Desktop
                                        TheCoroner9 Level 1

                                        MatthewsM7,

                                         

                                        I was in your position in the fall of last year. Considered building one myself with a friend.

                                         

                                        After weighing my options and various companies who build systems,I decided to have a system professionaly built by ADK for CS5.5 that I wouldn't have to worry about whether it could handle this footage or that.

                                        I couldn't be any happier with my system or their service. My next system will be built with them as will the one after that.

                                         

                                        ADK saved me a lot of  headaches for which I'm grateful for = priceless.

                                         

                                        Good Luck!

                                        Jeff

                                        • 17. Re: Building vs. Buying Desktop
                                          Whiteout Media

                                          If you are willing to be your own tech support, build it yourself. All parts have warranties, and frankly yes, you'll save a lot of money. I'll never go back to prefabbed computers.

                                          • 18. Re: Building vs. Buying Desktop
                                            cpachris_1969 Level 1

                                            Building your own system can be a lot of fun.  And if you join any of the numerous online communities you will have an army of resources at your fingertips anytime for problems that come up.  I'm in the middle of building a high-end system for photo/video editing.  You can see my build log using this link.  Here are a couple of shots to peak your interest!  I'm using a theme based on my alma mater, the University of Oklahoma. 

                                             

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