Explaining the High Cost of 3D Printing
3D printer material cost: limits of a razor & blade business model
Most people are familiar with a razor and blade business model. Made famous by Gillette, first a company sells people the razor (or whatever the base unit is) at or below its true cost, and then the company charges a high premium on the blades now that it controls a large market share. As business strategies go, razor and blade is a pretty great approach because it allows consumers to get what they want now, and also guarantees a continued revenue stream for the producer in proportion to how much the consumer actually uses its product. This is the same strategy used by HP with printers and ink, and it can even be seen in electronics, such as cell phones or the mobile payment device Square, where the hardware is cheap but the associated service is controlled by the hardware maker or its partners, who make their real profits from a device’s use, not its sale.
It is no big surprise then that 3D printer manufacturers went for the same razor and blade strategy with their machines. Especially as a new type of industrial hardware in a price-sensitive enterprise marketplace, getting that initial sticker price down was important. It was almost certainly the difference between selling and not selling. So in other words, I don’t blame them. There’s just one problem. That is, for many types of 3D printers, the “blade” is really just a spool of plastic.
Fused Deposition Modeling, or FDM, is the 3D printing technology behind the Statasys line of 3D printers. Stratasys alone is a pretty big fish (the #2 3D printer manufacturer in the world), but the reason I focus on FDM in particular is because it is also the basis of the Rep-Rap, and in turn nearly all of the low-end, next generation hobbyist 3D printers that have come along in the last five years. And the thing is, FMD is really quite simple. It is essentially a hot glue gun being controlled by a computer, except that instead of extruding hot glue, it extrudes melted plastic. And what is the input to this extruder? You guessed it, nothing but a continuous filament of ABS or PLA plastic, usually coming straight from a 1kg spool.
So what’s the problem with this? What does FDM or a razor and blade business model have to do with large format 3D printing? Let me tie it all together. First off, as I explained in my last post, industrial 3D printer companies made the decision to focus on precision and cost during the last 20 years of development. Part of that cost strategy was to get the price of buying a 3D printer as low as possible, so they sold the units at lower margins and then made up for it with high margin materials. 3D printing was new, only a few players were doing it, so it was easy to control the supply of build material to customers. Besides, how would a customer know he is paying a 10x markup on plastic? High material prices were simply accepted, and they were factored into pricing across the industry, to include 3D printing service companies, through which most small firms who can’t afford their own printers get their 3D printed parts made. And what did this mean for ordering or making large 3D printed parts? They were expensive. Really expensive. And so designers making large prototypes continued to use methods other than 3D printing.
Yet today, with the Maker Movement gaining steam and low cost 3D printers popping up everywhere, the game is nearly up. While Stratasys and 3D Systems will no doubt continue to charge huge markups to their installed industrial customers, companies like Makerbot will eat away at many of their low end customers. Not only is a Makerbot Replicator 2 one-fourth the price of the cheapest Stratasys machine, its materials are one-fifth the cost ($48 vs $250 per kilo) – and that’s if you buy directly from Makerbot. A quick search on Alibaba gives prices closer to $25 per kilo.
All of this is to say that while the true cost of an industrial 3D printer might actually be higher than the sticker price, the true cost of printing something (i.e. the material cost) is much, much lower. And this means that large format 3D printing isn’t nearly as crazy of an idea as those experienced with 3D printing might think it is.