Cost To Develop GPZ 7000 Over $10 Million

[Steve Herschbach]

Just in case you were wondering - from http://www.codan.com.au/Portals/0/investorpubs/Half Year Company Announcement Feb 2015 Final complete.pdf in 2015:

"Minelab launched the GPZ 7000 gold detector to the market in February. This is a significant new product platform that has taken five years to develop at a cost of over $10 million."

The good news for Minelab is it has paid off as sales and profits for Codan have been up in the last few years after collapsing when the Africa GPX 4500 bubble popped. From the Codan 2016 Annual Report "while sales were strong in the developed world when the product was released last year, the most significant growth in our FY16 gold detector sales has come from the successful launch of this product into our African markets. The GPZ 7000® was launched in Africa in October 2015, and demand exceeded our initial expectations".

Since Minelab's parent company Codan is publicly traded interesting tidbits can be found in their annual reports. A few more:

"The GO-FIND® is now Minelab’s highest unit seller"

"FY17 OBJECTIVES - Release two exciting new products – lower-priced gold machine for Africa and improved larger coil for GPZ 7000®.... Continue investment in product development to create next wave of new products in FY18."

Nobody knows for sure how many metal detectors are sold worldwide but Codan alone currently does close to $100 million sales annually in detecting equipment. That does however include landmine detection equipment. Check out pages 19 and 20 of the 2016 report for more details.

[AU_Solitude]

While a good portion of their $100 Million in annual sales may come from military contracts that is still an astounding number. Far more people out there swinging Z's than I had thought!

[Steve Herschbach]

I have always believed that Minelab can trace their success to not underestimating what people will pay for high performance detecting gear. I too many times when making a pitch to detector companies in the past was told "people won't spend that much for a detector". Gold detectors in particular got treated as a niche market by the U.S. manufacturers and Minelab took full advantage of that fact to eventually dominate the market.

People think of places like Africa as being dirt poor. Yet for a couple years Minelab could not build and ship the GPX 4500 quick enough and every dealer in the US got calls from buyers willing to pay over retail to buy detectors ten at a time, which they then sold for double or triple retail in Africa. It does not surprise me the GPZ is selling well in Africa and probably in greater numbers by far than anywhere else.

[fredmason]

10 million is a lot of money. However at 5000 a detector it would only take 400 gpz's to recover the cost. Assuming my math is correct and my guess at what they sell to dealers for is anywhere in the ballpark.

I am very happy Minelab stepped up!

fred

[AU_Solitude]

8 minutes ago, fredmason said:

10 million is a lot of money. However at 5000 a detector it would only take 400 gpz's to recover the cost. Assuming my math is correct and my guess at what they sell to dealers for is anywhere in the ballpark.

I am very happy Minelab stepped up!

fred

I believe your math is a little off, granted your wholesale is probably in the ballpark. Something else to consider is that I'm sure they didn't stop selling Z's the second they broke even.

[fredmason]

2000000 divided by 5000 is 400 on my machine, I admit I can get blinded by my brilliance so where is the math wrong?

I am only guessing at the wholesale price to dealers as I am not privy to that info...

either way, I expect them to get all they can. That is capitalism, isn't it?

fred 

[Steve Herschbach]

The development cost is just one missing part of the puzzle when people just look at the hardware and say "oh, it would only cost X dollars in parts to make this". Well, yeah, once you have figured out how to make it! Add in marketing expense, warranty repair costs, etc. and there is a whole heck of a lot more cost in that GPZ 7000 than people think.

You can never discount the genius in a garage but the fact is huge cash flows and large engineering teams does give one a distinct advantage when it comes to staying on the cutting edge.

[Norvic]

The Go Find being the top seller is sort of surprising, but as it`s sold in most of OZs retail camping etc chains, it is good maybe it will become a more popular pastime for todays young generation. Do you folks have them being sold in such retail chains over in the US?

[DolanDave]

4 hours ago, Steve Herschbach said:

I have always believed that Minelab can trace their success to not underestimating what people will pay for high performance detecting gear. I too many times when making a pitch to detector companies in the past was told "people won't spend that much for a detector". Gold detectors in particular got treated as a niche market by the U.S. manufacturers and Minelab took full advantage of that fact to eventually dominate the market in that respect.

People think of places like Africa as being dirt poor. Yet for a couple years Minelab could not build and ship the GPX 4500 quick enough and every dealer in the US got calls from buyers willing to pay over retail to buy detectors ten at a time, which they then sold for double or triple retail in Africa. It does not surprise me the GPZ is selling well in Africa and probably in greater numbers by far than anywhere else.

I remember when the Africa craze started a while back.... I sold 2 Minelab GPZ 4500's on ebay for $10,000 each...

Dave

[jasong]

5 hours ago, Norvic said:

Do you folks have them being sold in such retail chains over in the US?

I was surprised when I went into Cabela's (a very large outdoor/sporting goods store) in Phoenix a few years back and found gold pans and Minelab detectors for sale, had a little mini aisle just for them.