When Chris Greening launched the ESP32 Rainbow—a meticulously crafted recreation of the Sinclair Spectrum with an ESP32-S3 brain, capacitive touch, and full-color UV printing—crowdfunding success seemed assured. The campaign on Crowd Supply netted £12,839.57 from 118 backers, with another 118 units bought by the platform itself. Yet, beneath the surface, Greening’s journey exposes a harsh truth: in hardware, even a "successful" campaign teeters on the edge of profitability.

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ESP32 Rainbow: A nostalgic hardware revival that faced modern economic realities.

The Illusion of Margin: Why $99 Wasn’t Greed

Greening initially aimed for a Sinclair-esque $49.99 price point but quickly realized this was unsustainable. As he details, hardware pricing demands a minimum 2.5x markup over Cost of Goods Sold (COGS) to account for distributor fees, tariffs, and risk. His COGS for 280 sellable units (after QA failures and samples) hit £30.60 per unit—driven by:
- PCB and components: Silk-screened boards and ESP32-S3 modules.
- Certifications: Mandatory CE/UKCA compliance, costing time and lab fees.
- Minimum order quantities: Producing 300 units to fulfill 236 orders, with buffers for defects.

Crowd Supply’s fees alone consumed $18.76 per unit, slashing revenue. Distributor margins (40-60%) forced the $99 retail price—far from a "rip-off," but a necessity for viability.

The Profit That Wasn’t: Labor and Tariff Landmines

Gross profit appeared healthy at £4,273.91, but imputing labor costs at UK minimum wage (£12.21/hour) revealed a £1,049.65 loss. Greening logged over 435 hours across 13 months for design, firmware, and logistics—time that could have earned more in consulting. Tariffs nearly derailed everything: shipping to the U.S. (DDP terms) risked 25% duties on the £12,839 shipment. Only by arguing "sufficient transformation" in the UK did he avoid catastrophe.

"If your top-down price (what people will pay) is less than your bottom-up COGS, seriously question if the product is viable."
— Chris Greening, echoing EEVBlog’s pricing fundamentals.

Certification Chaos: The Myths and Costs

Many assume hobby projects or pre-certified modules (like the ESP32) skip regulatory hurdles. Greening debunks this: CE/UKCA is mandatory for consumer sales, even with certified components. His path involved:
- Self-certification: Based on lab tests for EMC, avoiding costly RED directives by disabling unused wireless features.
- Affordable labs: Using China’s BCTC and advisors like Smander (~£500) to target essential tests.
- Brexit complications: Leveraging CE for UKCA equivalence—for now.

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The stark gap between perceived and actual costs in hardware.

Logistics: Where Packages Go to Die

International shipping became Greening’s nightmare. Packages stalled for weeks, with opaque tracking and customs forms (like EORI numbers) causing delays. Crowd Supply’s U.S.-centric model amplified costs for global backers, a flaw in distributor-dependent ecosystems.

Crowd Supply: Savior or Straitjacket?

The platform provided critical advantages: upfront cash, distributor infrastructure (handling sales tax/fulfillment), and accountability coaching. Yet its 40-60% distributor cut compressed margins, and U.S.-only warehousing ignored global tariff risks. For indie creators, the trade-off is stark: ease versus profitability.

The Verdict: Love Over Lucre

Greening’s net profit, including unsold stock, barely cleared £1,000. Was it worth it? Financially, no—but community feedback and open-source traction offered intangible rewards. His advice to builders:
1. Price aggressively: Use Crowd Supply’s viability spreadsheet and assume 2.5x COGS.
2. Own your audience: Market via Substack or YouTube pre-launch; don’t rely on platforms.
3. Budget for chaos: Allocate 20% for tariffs, shipping snafus, and certification surprises.

Hardware crowdfunding isn’t a gold rush—it’s a high-stakes puzzle where passion often subsidizes the balance sheet. As Greening concludes: "I didn’t get rich, but I built something real that people are using. And that’s worth a lot."

Source: Crowdfunding Success - Was it worth it? by Chris Greening on atomic14.substack.com.