4 ms·

I wonder how much a refrigerator costs to design and manufacture that just keeps things cold. That might help with margins.

by mfer 6y ago

owenmarshall 6y ago
Bare-bones refrigerators are available: https://products.geappliances.com/appliance/hotpoint/top-freezer-refrigerators https://products.geappliances.com/appliance/hotpoint/top-fre... The margins for appliance manufacturers are tight. 3-5% is not uncommon. Features like wifi connectivity and premium finish are how you start increasing profitability but even then you aren't making significant profit per unit until you hit the very top product lines – think Samsung's Dacor or GE's Monogram. Any proposed change to the appliance goes through a cost/benefit analysis that is more rigorous than anything I've seen in a software company: if your BOM or cost to assemble go up by pennies you have to convince executives that either cost of quality goes down to compensate, OR that it will drive sales. Water filters, on the other hand, have margins that have 2 or even 3 zeros at the end.
- karatestomp 6y ago
  Fridges are one of those product categories for which the magic of the free market misses completely for me. I want a basic fridge with maybe $200, tops (manufacturing & material cost) of improvements to things that actually matter (castors on drawers make a huge difference for the feel of fridge drawers, for example) + non-ugly exterior. Counter depth (so less material!). No ice maker, no water integrated, none of that stuff. Certainly no damn screens. Just a compressor with a cabinet. A good and useful layout, or "UX" if you prefer (this adds no cost, or very little, past the initial design, which can be re-used indefinitely). I will pay a $600-800 premium over the most basic model for this, retail. Call it $1500. ... but in fact the nice parts I want aren't available except on very "high-end" models that start at like $2.5k from a dent-n-ding outlet (let alone full retail) with tons of extra crap, and you pay significantly more for counter depth in most cases (I guess economies of scale make them solidly 10% more expensive, despite the savings in materials?). It sucks, I just want a basic fridge that looks & feels nice and doesn't stick out into my kitchen like some kind of menacing mechanical monster, but is not a rip-off. Pretty much doesn't exist. [EDIT] actually it's fair to say that "nice, simple, and reasonably priced for the extras it takes to achieve 'nice'" is a category markets often fail to deliver for me. They seem to be great at delivering cheap and crappy, cheap and kinda OK (think: all non-Ikea flat-pack furniture for the former, Ikea for the latter), expensive and crappy, and expensive and actually good. There's a middle-market that seemingly never gets served and sends me looking for antiques, when possible. I suspect the reason for these outcomes boil down to information asymmetry, like lots of problems with markets.
  - rootusrootus 6y ago
    So what you really want is what Speed Queen would make if they made refrigerators. I am 100% with you.
    - Corrado 6y ago
      Unfortunately, it's my understanding that Speed Queen has also succumbed to the cost-cutting measures of plastic parts and things that can't be replaced / repaired easily.
  - owenmarshall 6y ago
    Ah, the free market... Many manufacturers sell to retailers under a unilateral minimum price policy. You can buy from the manufacturer and stock your showroom, but you are not allowed to mark it below a certain price. You'll also see payments from the manufacturer to the retailer in the form of "advertising support" to drive certain models. So you'll end up with a retailer: * Paying $500 per unit (A) which they cannot mark below $399, but buying a certain amount at a loss to receive a payment from the manufacturer for paper/web/TV advertisements contingent on including A in the advertisement and possibly even presenting it in a certain way on the sales floor (endcap, front display, etc.) * Paying $450 per unit for unit (B) which they cannot mark below $599 The goal for the retailer is then obviously to buy as few of the first unit as possible to get the manufacturer payment and then push as many customers as possible to buy the second. The manufacturer is happy because unit A was last year's model rebadged and they could clear inventory and move towards retiring it. The real top end items are sold under unilateral fixed pricing: you pay $X and must retail it for $Y. Manufacturers have people employed to mystery shop and look for violations. If a retailer marks up or marks down, they are blacklisted. Possibly for all lines, not just the marquee brand - depends on your sales.
a1a1a1a1a1a1 6y ago
Having worked briefly at a major appliance company, I can say that refrigerator design is not simple. Refrigerators aren't made to just cool things down, the entire interior is expected to stay at a uniform temperature. As a result, many refrigerators have more heating elements than ovens. There's a ton of testing that needs to happen to determine hot spots, cold spot, poorly insulated areas, etc. and that's just for the cooling. Also the current refrigerant used in refrigerators (driven by regulation) is very close to propane, it has an explosion risk, so that mandates tons of specific testing. The real issue is that the release cycles of appliances are so much shorter than the expected life cycles. There are life tests for appliances, but they have to be accelerated massively, so it's not a great representation of the lifetime use of the appliances. All of that to say the data collected by an internet connected appliance is of huge value to the manufacturer. They can get data from the appliance for it's entire life, usage and performance of specific components, etc. Manufacturers are going to find as many cheap ways as possible to tempt consumers to connecting their products to the internet so they can get that data back. It's unlikely the trend is going to slow down.
- kaibee 6y ago
  > the entire interior is expected to stay at a uniform temperature. Surely this is as simple as adding a small fan so that air circulates inside?
  - account47t83 6y ago
    I believe that won't work for the same reason that I can't cool my house with one A/C window unit and a big fan
  - a1a1a1a1a1a1 6y ago
    I'm not an expert in the field of refrigeration so I'm speculating a bit, but I believe the won't work because the cause of inconsistency of temperature is that the insulation isn't as effective at every part of the cabinet (probably due to shape, what components are packed around the cabinet, etc.) so moving air over those areas would cause heat to enter the cabinet faster, requiring more cooling power. That might be effective, but I think the approach that's taken is more efficient, and that's what refrigerators are all about (They move like 2-3x more heat energy out of the cabinet that is put into the compressor, fans, etc.). The less movement of the air inside the more effective the insulation will be. It's also worth noting that just insulating better isn't really an option (without developing better insulation) because refrigerators need to have as large as possible interior volume compared to exterior volume to be competitive, what can be fit inside is a definite selling point.

I wonder how much a refrigerator costs to design and manufacture that just keeps things cold. That might help with margins.

by mfer 6y ago

I wonder how much a refrigerator costs to design and manufacture that just keeps things cold. That might help with margins.

owenmarshall 6y ago

Bare-bones refrigerators are available: https://products.geappliances.com/appliance/hotpoint/top-freezer-refrigerators https://products.geappliances.com/appliance/hotpoint/top-fre... The margins for appliance manufacturers are tight. 3-5% is not uncommon. Features like wifi connectivity and premium finish are how you start increasing profitability but even then you aren't making significant profit per unit until you hit the very top product lines – think Samsung's Dacor or GE's Monogram. Any proposed change to the appliance goes through a cost/benefit analysis that is more rigorous than anything I've seen in a software company: if your BOM or cost to assemble go up by pennies you have to convince executives that either cost of quality goes down to compensate, OR that it will drive sales. Water filters, on the other hand, have margins that have 2 or even 3 zeros at the end.

karatestomp 6y ago
Fridges are one of those product categories for which the magic of the free market misses completely for me. I want a basic fridge with maybe $200, tops (manufacturing & material cost) of improvements to things that actually matter (castors on drawers make a huge difference for the feel of fridge drawers, for example) + non-ugly exterior. Counter depth (so less material!). No ice maker, no water integrated, none of that stuff. Certainly no damn screens. Just a compressor with a cabinet. A good and useful layout, or "UX" if you prefer (this adds no cost, or very little, past the initial design, which can be re-used indefinitely). I will pay a $600-800 premium over the most basic model for this, retail. Call it $1500. ... but in fact the nice parts I want aren't available except on very "high-end" models that start at like $2.5k from a dent-n-ding outlet (let alone full retail) with tons of extra crap, and you pay significantly more for counter depth in most cases (I guess economies of scale make them solidly 10% more expensive, despite the savings in materials?). It sucks, I just want a basic fridge that looks & feels nice and doesn't stick out into my kitchen like some kind of menacing mechanical monster, but is not a rip-off. Pretty much doesn't exist. [EDIT] actually it's fair to say that "nice, simple, and reasonably priced for the extras it takes to achieve 'nice'" is a category markets often fail to deliver for me. They seem to be great at delivering cheap and crappy, cheap and kinda OK (think: all non-Ikea flat-pack furniture for the former, Ikea for the latter), expensive and crappy, and expensive and actually good. There's a middle-market that seemingly never gets served and sends me looking for antiques, when possible. I suspect the reason for these outcomes boil down to information asymmetry, like lots of problems with markets.
- rootusrootus 6y ago
  So what you really want is what Speed Queen would make if they made refrigerators. I am 100% with you.
  - Corrado 6y ago
    Unfortunately, it's my understanding that Speed Queen has also succumbed to the cost-cutting measures of plastic parts and things that can't be replaced / repaired easily.
- owenmarshall 6y ago
  Ah, the free market... Many manufacturers sell to retailers under a unilateral minimum price policy. You can buy from the manufacturer and stock your showroom, but you are not allowed to mark it below a certain price. You'll also see payments from the manufacturer to the retailer in the form of "advertising support" to drive certain models. So you'll end up with a retailer: * Paying $500 per unit (A) which they cannot mark below $399, but buying a certain amount at a loss to receive a payment from the manufacturer for paper/web/TV advertisements contingent on including A in the advertisement and possibly even presenting it in a certain way on the sales floor (endcap, front display, etc.) * Paying $450 per unit for unit (B) which they cannot mark below $599 The goal for the retailer is then obviously to buy as few of the first unit as possible to get the manufacturer payment and then push as many customers as possible to buy the second. The manufacturer is happy because unit A was last year's model rebadged and they could clear inventory and move towards retiring it. The real top end items are sold under unilateral fixed pricing: you pay $X and must retail it for $Y. Manufacturers have people employed to mystery shop and look for violations. If a retailer marks up or marks down, they are blacklisted. Possibly for all lines, not just the marquee brand - depends on your sales.

a1a1a1a1a1a1 6y ago

Having worked briefly at a major appliance company, I can say that refrigerator design is not simple. Refrigerators aren't made to just cool things down, the entire interior is expected to stay at a uniform temperature. As a result, many refrigerators have more heating elements than ovens. There's a ton of testing that needs to happen to determine hot spots, cold spot, poorly insulated areas, etc. and that's just for the cooling. Also the current refrigerant used in refrigerators (driven by regulation) is very close to propane, it has an explosion risk, so that mandates tons of specific testing. The real issue is that the release cycles of appliances are so much shorter than the expected life cycles. There are life tests for appliances, but they have to be accelerated massively, so it's not a great representation of the lifetime use of the appliances. All of that to say the data collected by an internet connected appliance is of huge value to the manufacturer. They can get data from the appliance for it's entire life, usage and performance of specific components, etc. Manufacturers are going to find as many cheap ways as possible to tempt consumers to connecting their products to the internet so they can get that data back. It's unlikely the trend is going to slow down.

kaibee 6y ago
> the entire interior is expected to stay at a uniform temperature. Surely this is as simple as adding a small fan so that air circulates inside?
- account47t83 6y ago
  I believe that won't work for the same reason that I can't cool my house with one A/C window unit and a big fan
- a1a1a1a1a1a1 6y ago
  I'm not an expert in the field of refrigeration so I'm speculating a bit, but I believe the won't work because the cause of inconsistency of temperature is that the insulation isn't as effective at every part of the cabinet (probably due to shape, what components are packed around the cabinet, etc.) so moving air over those areas would cause heat to enter the cabinet faster, requiring more cooling power. That might be effective, but I think the approach that's taken is more efficient, and that's what refrigerators are all about (They move like 2-3x more heat energy out of the cabinet that is put into the compressor, fans, etc.). The less movement of the air inside the more effective the insulation will be. It's also worth noting that just insulating better isn't really an option (without developing better insulation) because refrigerators need to have as large as possible interior volume compared to exterior volume to be competitive, what can be fit inside is a definite selling point.