CHAPTER 17
How to Make a Million Dollars of Value
As we discussed in Chapter 12, digital manufacturing technologies, such as 3D printing, have matured a lot (Gershenfeld, 2005)—to the point where you can use them in your living room or at least your garage, no matter where you live (Pearce et al., 2010). There has been an exponential rise in designs for hardware released under open-source Creative Commons licenses or placed in the public domain (Wittbrodt et al., 2013). This enables you to take advantage of a new paradigm: distributed manufacturing of all kinds of products released under free licenses that we call free and open-source hardware (FOSH). The availability of these designs has a large value to those with access to digital manufacturing methods. But how much value? In this chapter, we will look at the simplest ways of calculating this value and show you how to spend some of your time to create a million dollars of value for the world!
A Wee Bit of Math
This chapter is based on a study I used to justify investment in FOSH for scientists (Pearce, 2015), but the math can be useful to you for calculating how much value you create for the world with any type of open-source product. I will discuss two ways to quantify the value of FOSH designs: (1) downloaded substitution valuation and (2) avoided reproduction valuation. The first is the easiest to do, so I will focus on this option because it is (a) relatively straightforward to understand, (b) based on reliable, freely available data, and (c) minimizes assumptions. All the straightforward ways to calculate value can be expanded further with additional (harder to nail down) benefits related to market expansion, scientific innovation, acceleration (e.g., all the scientific devices discussed in Chapter 13), educational enhancement (e.g., can the protractor you designed be used by students in school to understand geometry), and health benefits that increase longevity and productivity (e.g., your design for a new sit-up machine could help others increase their core strength).
Downloaded Substitution Valuation
The downloaded substitution valuation uses the number of times that an open-source design is downloaded to quantify the value of the design to the world. The basic idea is that the value of the hardware design is equal to the number of times it was downloaded times the difference in the cost of the open hardware and the commercial hardware. Thus, the downloaded valuation for substitution savings VD at time t can be written as
VD(t) = S × P × ND(t)(17.1)
where the savings S from FOSH digital manufacturing is determined simply by subtracting the cost to make something from what it would cost to buy. Here, S has been shown to be substantial in the developing world for appropriate technology (Pearce et al., 2010), as well as for consumer goods (Petersen and Pearce, 2017) and even toys (Petersen et al., 2017). Moreover, S is maximized for custom low-volume products such as scientific or medical equipment, where the open-source cost is generally only 1 to 10 percent of the cost to buy a commercial product, as we learned in Chapter 13 (Pearce, 2014a). In the equation, ND(t) is the number of times the digital design has been downloaded at time t. Many websites keep track of this number for you.
You will notice that there is one extra term, P, which is the percent of downloads resulting in a product. We do not really know exactly what value to put in for P because some people could download the designs and not use them or, perhaps more likely, a person could download a design and make a bunch of copies to make a set, exchange via email, put on a memory stick, or post on peer-to-peer (P2P) sites that are not recorded. In scientific studies, we use P = 1. Thus, it does not impact the equation at all (anything multiplied by one is that number). We can say that P = 1 based on my informal discussions with hundreds of RepRap owners in which they claim that the vast majority of designs downloaded were printed. You can think of it like an mp3 file that you might download from the web. You probably listened to the file at least once. It is the same for files to laser cut or to 3D print. There is no value in them to the user unless the user uses them to make the thing the file describes. This assumption has some error associated with it, but it is a conservative assumption (meaning that your estimates of value will be underestimates). Also, S can change with time, and the number of total downloads tends to increase as time marches on. Money has different value based on what time you are talking about, so if you really want to get into the nitty-gritty details, see the paper (Pearce, 2015). To get a good estimate of the value of your design, just take the difference in cost to make it versus to buy it and multiply by the number of downloads.
Avoided Reproduction Valuation
What if the thing you want to design and share is simply not available anywhere on the market? How do you calculate the value then? We can do this using the avoided cost of reproduction value VR for a single buyer. The idea is that you could determine the value to make something new that is not really on the market yet based on how much it would cost to hire someone to make it. Thus VR is given by multiplying h (the number of design hours needed to replicate the product) and w (the hourly wage of the workers needed to produce the product). The more complicated the design, the harder (more skill) and longer it takes you to make it, the greater the value. Mathematically, this is shown as
VR = h × w(17.2)
This method of capturing value can also be extrapolated to everyone (e.g., individuals who would hire firms or freelance designers to complete the design) to obtain the total value to society. Again, you can take variations in wages and discount-rate variables into account, but the reader is referred to my paper on the subject (Pearce, 2015) if you really want to get into the details.
Case Studies
With a few real-world examples, everyone can see how they can make a million dollars of value. The first is a case study to determine the value of an open-source syringe pump design (Wijnen et al., 2014). In this case, the syringe pump represents a valuable tool that may be funded by the government for the acceleration of scientific innovation, but that also has applications in education and medicine. The other case studies include sporting goods: a compound bow balancer, a dead-lift jack, and a whistle.
Open-Source Syringe Pump
Figure 17.1 shows an example of a pump you can make using an open-source syringe pump (OSSP) library (Wijnen et al., 2014). The library was designed using open-source and freely available OpenSCAD (openscad.org). Most of the pump parts can be fabricated with an open-source RepRap 3D printer (reprap.org), whereas other necessary parts are readily available, such as a stepper motor and steel rods. The design, bill of materials, and assembly instructions are globally available to anyone wishing to use them (www.appropedia.org/Open-source_syringe_pump). You can use your cell phone to drive the device with wireless control because it runs on a quasi-open-source Raspberry Pi minicomputer (www.raspberrypi.org).
Figure 17.1 Michigan Tech student showing off her variant of the open-source syringe pump. (CC BY-SA) https://www.appropedia.org/Open-source_syringe_pump
The original study on the syringe pump found that it is as good as (or better than) commercial syringe pumps. The low-cost open-source variety of syringe pumps, however, are completely customizable, allowing both the volume and the motor to scale for specific applications, such as any research activity, including the carefully controlled dosing of reagents and pharmaceuticals and the delivery of viscous 3D-printer media. So how much is it worth?
Method 1: Downloaded Substitution Value
The designs for the open-source pump were released in September of 2014, and in one month, the designs had been downloaded from two digital repositories a total of ND = 424 times (114 on Thingiverse and 310 on Youmagine). The cost to purchase a traditionally manufactured syringe pump Cp ranges from $260 to $1,509 for a single pump and $1,800 to $2,606 for a dual pump (Wijnen et al., 2014). The cost of the materials for a single open-source pump is $97, and for the double, it is $154. The time to assemble either the single or double pump is less than an hour and can be accomplished by a nonexpert. Although the time to print the components is less than four hours on a conventional RepRap, workers can do other tasks while printing. The assembler hourly rate is assumed to be $10 per hour because no special skills are needed. As discussed earlier, it was assumed that P = 1.
This provides a savings for substituting the open-source syringe pump for a commercial one of between $153 and $1,402 for a single pump and between $1,636 and $2,442 for a double pump. Thus, following Equation (17.1), the value VD of the pump library after one month ranged from more than $64,000 to more than $1,000,000 for the global community. A million dollars of value in a month! Not bad. Performing even a simple linear extrapolation for a single year provides a total value of between $778,000 and $12.4 million. Obviously, this calculation can be expanded for more years, but then the discount rate must be taken into account, which can vary depending on the organization or individual performing the analysis.
There is a huge uncertainty in the value saved based on what the syringe pump is replacing—is it a high-end or low-end pump? The low-end value is based on a simple infusion pump with considerably less functionality than the open-source syringe pump. Although it is possible that some of the downloaders only needed a simple infusion pump, the majority would be likely to be replacing more sophisticated devices. In addition, the open-source library allows for more programmable control than any of the other pumps on the market; thus, it appears reasonable to estimate the value using a midrange pump such as the GenieTouch Syringe Pump for $675, which provides a savings of $568 per pump. This provides a value of over $5 million today (based on around 10,000 downloads) for the global commons. In addition, using the OSSP library, it is possible to make even more sophisticated and valuable equipment. For example, for $308 in parts, you can construct a four-syringe pump using the FOSH design library, but a Cole-Parmer Continuous Flow Syringe Pump with four syringes costs $3,947, which is an S value of more than $3,600 for a single download!
Method 2: Avoided Reproduction Valuation
The mechanical designs for the open-source syringe pump were completed by experienced engineers in less than 6 worker-hours. To print and revise the five 3D-printed components took 3 hours, assembly took less than 1 hour, and software development and Pi wiring took less than 16 hours. The total design and prototyping time was less than 26 hours. This schedule was possible because the designers were experienced with similar designs and had access to all the components. According to Glassdoor, the median annual salary for a CAD engineer and a software engineer is approximately $89,000, and ignoring overhead and benefits costs to be conservative for a 50-week year, working 40 hours per week, the w value is $44.50. Thus, VR from Equation (17.2) is $1,157. With the cost of the parts for a single open-source syringe pump being $97, the total cost for the first pump for a firm designing it is $1,254, which is more expensive than the lowest-cost syringe pumps, but still would provide savings for the high-range products. Thus, it is likely that some companies have designed in-house pumps before, and there is some evidence of this (i.e., syringe pump singular designs at Massachusetts Institute of Technology, Hackaday, and Openpump.org). These other designs were not global pump libraries, although they would provide solutions for a subset of syringe pump users. Now, using ND = 424 as a proxy for people who may be willing to either complete the design themselves or hire a freelancer, after the first month, the value is more than $490,000, and using the same extrapolation to the first year, it would be more than $5.8 million.
It has been five years, and it is instructive to look at the values of wealth actually generated by the open-source syringe pump, which is easily many millions of dollars. Because the open-source syringe pump represents a savings of between 59 and 93 percent, if it gains significant market penetration, it can be expected to increase the market for syringe pumps. Because the pump meets the standards for research and has already been vetted, it seems reasonable that it would be most likely to be adopted by university labs first. This appears to be what has happened based on the number of derivatives of the open hardware found throughout university labs. These derivations can become quite significant, such as with the recently open-source Y-struder shown in Figure 17.2 (Klar et al., 2019). Thus, there is potential additional value that the FOSH design provides for both scientific research and education.
Figure 17.2 (a) The Ystruder syringe pump extruder; (b) the Ystruder mounted as an indirect drive on an open-source Prusa I3 style 3D printer using tubing; (c) the Ystruder mounted on a 43-millimeter-diameter spindle mount used for direct drive. (CC BY-4.0) https://doi.org/10.1016/j.ohx.2019.e00080
The value of FOSH in labs is not only the dollar amount saved for research but also the value of the overhead (indirect costs, which average 52 percent [in January 2013]) charged on grants to purchase the equipment. These overhead rates are primarily used to subsidize administrative salaries and building depreciation (January 2013) and have lead to a practice of rating universities by research expenditures, which perversely provides an incentive to increase these rates while depressing the use of FOSH (Pearce, 2014b). This would lead to FOSH values of more than $4.3 million and more than $2.7 million for Methods 1 and 2, respectively.
By decreasing the cost of research equipment, more resources are available to do science. For example, if a four-syringe pump is fabricated for a molecular biology lab, the savings would be enough to hire a summer student, presumably increasing the scientific discovery rate. In addition, if syringe pumps used for electrospinning novel materials represented a bottleneck to scientific discovery for a chemistry lab, being able to make between 2 and 14 open-source syringe pumps for the price of commercial alternatives would relieve that bottleneck and increase the rate of scientific discovery. Quantifying the value of an increased rate of discovery entails a specific study in each lab that would need to be done after the discoveries were made, with controls for similar labs operating with less or inferior equipment. Similarly, if because of its lower cost the pump was able to be used in the classroom or lab courses either at the university or for precollege education, the improved education that students received because of access to it would be positive, as would be the tertiary effects of their contribution to the economy. Qualitatively, however, it is clear that FOSH has scientific applications and costs less than commercial offerings has value.
The medical field is the primary market for syringe pumps, but to be used outside the developing world, the open-source pump would need to go through extensive testing and certification because of liability concerns. When the vetting and certification are complete, the effect of the decreased cost for the use of syringe pumps on the overall cost of hospital care would result in saving even more money than simply the economics of the pump. Regardless of which model is used to calculate the value of a human life, it is clear that even a fraction of a life saved would result in additional value created by FOSH development and its medical applications. It should also be pointed out that these values would tend to accrue in regions where low-cost medical equipment is sorely needed now (United Nations, 2008).
Because the designs are reusable, with solid modeling and 3D printing, designs can be expanded or joined together, rapidly increasing the rate of innovation, similar to observations seen with software (Ball, 2003). The results of this case study confirm these enormous potential values and agree with the sentiment of Nobel laureate Sir John Sulston who said that research that is open to everyone is at least nine times more valuable to society than research that is closed (Love, 2014). The internet is an example of what happens when channels of communication are left open for participation and growth, and FOSS work (Raymond, 1999) has demonstrated not only how well the internet can be used for collaborative developments, such as FOSH, but also the efficiency, profitability, and opportunities of the open-source paradigm over its proprietary counterparts.
Consumer Goods
Megasavings are not limited to things scientists want for their labs—far from it. There are now millions of free and open-source designs you can download and replicate on any number of machines such as desktop 3D printers. Consider the following three specialty consumer sporting goods that might be of interest to the athlete in all of us. First is a compound bow balancer (Figure 17.3), which helps hard-core archers to be better able to hit their targets. If you want one, it will set you back close to $300. You can 3D print it out and use about $17 worth of hardware to make your own, saving yourself well over $250, which is enough to buy a low-cost RepRap! The design has been downloaded more than 2,000 times, saving the worldwide archery community more than a cool half-million dollars already.
Figure 17.3 Compound bow balancer available on Youmagine as a design. (CC BY-SA) https://www.appropedia.org/File:Compound_Bow_Balancer_Assembled.jpg
Although you can 3D print toys, the common RepRap printers can do far more than that, even for the most challenging applications. Maybe you are more into indoor sports and like weightlifting. Once you get strong, it gets more and more irritating to load/unload the plates. To make your life a little easier, you can 3D print a dead-lift jack or an Olympic lifting jack, as seen in Figure 17.4. You can then easily strip off and reload weights onto your bar when you are by yourself, allowing you to not have to lift the bar with one hand as you struggle with removing the weight on the other side. This design has been tested with up to six plates, which is 270 pounds on one side. This should be more than enough for all but the Hulk, She-Hulk, and a few Olympic-class or professional athletes. By printing out five puzzle-like pieces with about a half a spool of filament and snapping this together, you save yourself about $32 and 7 pounds of weight from lugging a commercial metal version back and forth from the gym. Perhaps what is most impressive about this design is that it works with PLA that you can print on any low-cost RepRap. Stastica reports that there are over 38,000 gyms in the United States alone. So, even if each gym only prints one dead-lift jack, the savings for the global fitness community would be more than $1 million.
Figure 17.4 Dead-lift jack available on MyMiniFactory as a design. (CC BY-SA-NC) https://www.myminifactory.com/object/3d-print-106708
The third example is the MakeItLoud V29, which is a survival whistle (Figure 17.5). It is called the V29 because it took 29 iterations to get it just right. It is rugged (tested by throwing it against pavement, driving over it with a car, and then leaving it underwater for two hours), easy to make and carry (it prints in a single piece directly on the print bed), and most important, very loud (a raised lip holds it securely in your mouth even if you are blowing as hard as you can with no hands). The V29 gets its ear-splitting 118 decibels using two slightly different tones produced at the same time by separate chambers on either side of the device. They alternate between canceling each other out and amplifying—so you get a nice shrill whistle regardless of conditions because the harder you blow, the louder it gets. The V29 also sports a hole in the back for a key ring or lanyard so you can wear it around your neck or attach it to your zipper or key chain. Thus, the next time you go hiking, you might want to print out one of these survival whistles and keep it on your jacket. More than 425,000 other people have already downloaded it, and because survival whistles cost a few dollars on Amazon, the V29 has already saved the global community more than $1 million in distributed manufacturing savings. This is pretty good savings for just a whistle!
Figure 17.5 MakeItLoud V29 survival whistle developed by Joe Zisa. (CC BY) https://www.thingiverse.com/thing:1179160
These, of course, are just examples, but hundreds of other open-source hardware designs have saved the global community millions of dollars—each. Many of these designs are within the reach of even novices who are willing to try to iterate a few times. (Twenty-nine is admittedly a bit outside the normal number of iterations for a device, but then again, the design is really, really good.) This is all possible because the number and variety of distributed manufacturing tools are proliferating. As more people gain access to 3D printers and CNC mills, these designs will save even more money while providing the global community with even more wealth. By each of us just giving a little of our time and effort, we can help hundreds of thousands of people. You—yes, you!—can create a million dollars of wealth as long as you share!
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