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equationfeaturedIn an article published in Modern Economy by Dr. Joshua Pearce, of Michigan Technological University, titled “Quantifying the Value of Open Source Hardware Development” one of the challenges of Open Source Hardware has been addressed: Creating a real world value for community developed creations. Three methods for quantifying the value of free and open source hardware designs were used, including “1) downloaded substitution valuation; 2) avoided reproduction valuation and 3) market savings valuation along with additional benefits related to market expansion, scientific innovation acceleration, educational enhancement and medical care improvement.”

As the number of free designs continue to increase at an exponential rate, it is theoretically possible to determine the value of each design using one of these aforementioned methods and a design from a popular design repository such as Thingiverse, Youmagine, etc. These methods attempt to dispel the myth that 3D printing can only be used for trinkets and desk ornaments, a common issue many experience when talking about 3D printing.

Method 1: Downloaded substitution valuation

“The download substitution valuation uses the number of time that a [free and open source hardware] design is accessed on the Internet to quantify the value of the design”. This method takes the cost of a similar purchased item and subtracts the cost to fabricate it yourself (Arduino, 3D printing, etc.), then multiplies the percent of downloads that result in an actual part and the number of times the item has been downloaded. The percent of downloaded parts becoming actual parts is hard to measure since you can share parts over email, USB sticks, etc. Also each download doesn’t necessarily mean just one part, since it is possible to fabricate many versions using the same file.

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Method 2: Avoided Reproduction Valuation

This method is a variation on method 1, looking at a single company and their expected cost to design the part in consideration. Very simply you take the number of hours spent on designing the product and the hourly wage of the people working on the product and multiply them together.

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Method 3: Market Savings Valuation

Method 3 uses an assumption that, in the future distributed manufacturing is commonplace. Using this assumption and the cost to fabricate an item (from method 1), the current market value, and the number of products of a specific type that make up the market, a value is obtained.

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So what do these methods mean for open source hardware designs? Take a typical cell phone case costing anywhere from $10 to $40 retail and an open source, freely available case from Thingiverse for the popular Samsung Galaxy S5. That case has been downloaded 1050 times at the time of this writing and the assumed cost of the part is $0.50 (which is actually a slightly overestimated value at $35/kg of PLA). Taking an average value of cases at $25 means the value of that design, if everyone who downloads it prints it out only once, is $25,725 using method 1.

Scaling up using Printrbot, their assembled Simple Metal printer ($600) and Makerbot’s cheapest offering, the Replicator Mini ($1375), it would take only 1291 Printrbots to create a $1,000,000 value of savings for the open-source community!

The full text offers further examples for each method, but is it important to see that every design uploaded to a repository is more than just a free part? Although individually, each part may save someone $20 or less, everyone who makes said parts saves creating value in the design.

Looking forward, this has the potential to motivate designers, tinkerers, makers, and everyone else who might want to look at 3D printing to move forward and release their designs for the community to use and improve. Seeing a design that has been downloaded 1000+ times, knowing it is saving everyone money can have powerful effects.

What do you think about these methods of valuation?  Will they be used more in the future?  Will they be advanced even further?  Discuss in the Open Source Hardware Valuation methods forum thread on 3DPB.com.

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