Prepared for ownership · Papago Vans

Let the market
pick the mix.

Papago keeps building custom vans exactly as it does today and starts taking Papago Collection orders at the same time. Production capacity moves to Papago Collection only as Papago Collection orders arrive to justify it. No new building, no second shop, no bet placed before there is evidence. This page prices what happens at each step, and names the threshold that says when to take one.

$125k

Total cost to open the order book. Nothing about production changes until orders arrive.

+$114k

Added gross profit per year, every time one bay converts from custom to Papago Collection.

9 orders

The threshold. Below nine Papago Collection orders a year, converting a bay loses money.

The unit of account

Bays, not vans

The shop delivers 24 vans per 8 months. Working back from that, a Papago Custom van holds a bay for roughly two months, which puts the current operation at about six bays. Papago Collection runs the same bays on pre-engineered plans at half the build time. So the real question is never how many vans. It is what a bay earns per month.

Today · six bays, all custom

bay 1

bay 2

bay 3

bay 4

bay 5

bay 6

36 vans a year · $6.84M revenue · $1.48M gross profit. Each bay produces six vans a year and $246,000 of gross profit.

After three bays convert · illustrative midpoint

bay 1

bay 2

bay 3

bay 4Papago Collection

bay 5Papago Collection

bay 6Papago Collection

54 vans a year · $9.00M revenue · $1.82M gross profit. A converted bay produces twelve vans a year and $360,000 of gross profit.

Same six bays. Same crew size. Same building.

One number runs this entire proposal. A bay building Papago Custom earns $20,500 of gross profit a month. The same bay building Papago Collection earns $30,000. That $9,500 gap is the whole argument, and it holds even though Papago Collection rings up $35,000 less per van and earns a thinner margin rate. Papago does not sell vans. It sells bay-months.

Head to head

Same six bays, same twelve months

Set the mix question aside and run the shop entirely one way, then entirely the other. Identical capacity, identical crew, identical building, identical calendar. The only variable is which product occupies the bays.

Vans delivered

Papago Custom36

Papago Collection72

Papago Collection builds twice as many vans, because each one holds a bay for one month instead of two.

Revenue

Papago Custom$6.84M

Papago Collection$11.16M

Papago Collection generates 63% more revenue, not 100%, because each van sells for $35,000 less.

Gross profit

Papago Custom$1.48M

Papago Collection$2.16M

Papago Collection earns 46% more gross profit. The lead narrows again, because each van carries $11,000 less profit.

Read those three bars in order, because the shrinking gap is the whole honest story. Papago Collection doubles the units, adds 63% to revenue, and adds 46% to gross profit. Each step down gives some of the advantage back, first to the lower price and then to the thinner per-van margin. It still wins all three. But anyone who pitches this as "we double the business" is quoting the top bar and hoping nobody reads the bottom one.

Twelve months, six bays	Papago Custom	Papago Collection	Wins
Months a van holds a bay	2.0	1.0	Papago Collection
Vans delivered	36	72	Papago Collection, 2×
Price per van	$190,000	$155,000	Papago Custom
Gross profit per van	$41,000	$30,000	Papago Custom
Gross margin	21.6%	19.4%	Papago Custom
Revenue for the year	$6.84M	$11.16M	Papago Collection, +63%
Gross profit for the year	$1.48M	$2.16M	Papago Collection, +46%
Gross profit over three yearsSame six bays, nothing added	$4.43M	$6.48M	+$2.05M

What Papago Collection has to do to win

Find 72 buyers a year instead of 36This is the entire catch. The shop can build them. Nothing on this page proves the market will absorb them, and doubling unit demand is a much harder problem than doubling unit output.
Hold the one-month buildAt six weeks per van instead of four, Papago Collection delivers 48 vans and $1.44M of gross profit, which is still ahead of custom but by 2% rather than 46%.
Fund twice the chassis floatSix vans a month instead of three means roughly twelve chassis on the ground rather than six. At $62,000 each that is $744,000 tied up against $372,000, a real balance sheet change.
Absorb twice the unit overheadWarranty exposure, service calls, delivery logistics, titling and registration all scale with van count, not revenue. Those costs sit below gross profit and this comparison does not include them.

What Papago Custom still wins

Every per-unit measure$35,000 more revenue and $11,000 more gross profit on each van, at a 2.2 point better margin. On a per-deal basis custom is simply the better business.
Capital efficiencyHalf the units means half the chassis float, half the warranty tail and half the logistics. Custom produces less profit on far less tied-up cash.
Demand it already hasThe 36 custom vans are a proven number. The 72 Papago Collection vans are a hypothesis, and the comparison above quietly assumes the hypothesis is true.
Pricing powerCustom sets its own number per build. Papago Collection publishes one and then has to defend it against every production Class B on the market.

The verdict, stated carefully. On equal capacity over equal time, Papago Collection wins all three of the measures that were asked about: more units, more revenue, more gross profit. It loses every per-unit measure. That is not a contradiction, it is the trade being proposed, and it only pays off if the extra 36 buyers a year actually exist. Capacity is the easy half of this problem and it is the only half this page solves.

Cost basis

Where the money goes on one van

Built bottom-up from a published chassis price and industry cost ranges. The chassis is close to a pass-through, so the margin lives entirely in the conversion.

Per van	Papago Custom	Papago Collection	Difference
Sale priceAverage ring-up	$190,000	$155,000	−$35,000
ChassisSprinter 2500 170" high roof, equipped	$62,000	$62,000	same
Conversion materialsCabinetry, electrical, plumbing, insulation, appliances	$45,000	$41,000	−$4,000
Direct build laborShop hours at loaded cost	$42,000	$22,000	−$20,000
Cost of goods	$149,000	$125,000	−$24,000
Gross profit per van	$41,000	$30,000	−$11,000
Gross margin	21.6%	19.4%	−2.2 pts
Months in a bay	2.0	1.0	half
Gross profit per bay-month	$20,500	$30,000	+$9,500
Gross profit per bay-year	$246,000	$360,000	+$114,000

Papago Collection earns a lower margin rate, and that is not an error in the model. The chassis costs the same $62,000 on a van that sells for $35,000 less, so a cheaper van carries a heavier fixed cost as a share of revenue. Papago Collection gives up 2.2 points of margin and $11,000 of gross profit per van, and wins anyway on the only measure that matters here, which is what a bay produces per month.

Does a 20% gross margin hold up?

There is no published gross margin benchmark for direct-to-consumer custom van conversion. It is a private, fragmented niche. The nearest public comparables are RV manufacturers, and they run lower for a structural reason that works in Papago's favor.

Winnebago Industries
FY2025, consolidated

13.0%

$365.1M gross profit on $2.8B revenue. Sells wholesale to a dealer network.

Thor Industries
FY2025, N.A. towable

14.7%

Its North American motorized segment ran near 7.8% in Q2 FY2025.

Papago, modeled
This page

19–22%

Sells direct. No dealer discount, no wholesale step, no floor-plan financing subsidy.

Why Papago should sit above the public names. Winnebago and Thor sell to dealers at wholesale and the dealer captures the retail spread. A direct-to-consumer builder keeps it. That is the whole reason a 20% assumption is credible next to a 13% benchmark, and it is the first thing to check against Papago's actual books. If real gross margin is nearer 14%, every dollar figure on this page drops by roughly a third.

The ladder

What each conversion is worth

Nobody decides this in advance. Each row is simply where the business lands if that many bays end up building Papago Collection, and the mix is settled by what customers order. Every step adds $720,000 of revenue and $114,000 of gross profit.

Bays on Papago Collection	Custom vans	Papago Collection vans	Total vans	Line : custom units	Revenue	Gross profit	vs today
None, today6 still on custom	36	0	36	—	$6.84M	$1.48M	base
1 bay5 still on custom	30	12	42	0.4 : 1	$7.56M	$1.59M	+$114k
2 bays4 still on custom	24	24	48	1.0 : 1	$8.28M	$1.70M	+$228k
3 bays3 still on custom	18	36	54	2.0 : 1	$9.00M	$1.82M	+$342k
4 bays2 still on custom	12	48	60	4.0 : 1	$9.72M	$1.93M	+$456k
5 bays1 still on custom	6	60	66	10.0 : 1	$10.44M	$2.05M	+$570k
6 bays0 still on custom	0	72	72	all line	$11.16M	$2.16M	+$684k

Today36 vans · $6.84M revenue · $1.48M gross profit

1 bay converted42 vans · $7.56M revenue · $1.59M gross profit

2 bays converted48 vans · $8.28M revenue · $1.70M gross profit

3 bays converted54 vans · $9.00M revenue · $1.82M gross profit

4 bays converted60 vans · $9.72M revenue · $1.93M gross profit

5 bays converted66 vans · $10.44M revenue · $2.05M gross profit

6 bays converted72 vans · $11.16M revenue · $2.16M gross profit

Papago Custom revenue Papago Collection revenue Gross profit, same scale

Notice that gross profit climbs far more slowly than revenue. Full conversion lifts revenue 63% but gross profit only 46%, because every Papago Collection van carries $11,000 less profit than the custom van whose bay time it took. Volume is what pays that back, which is exactly why the nine-order threshold further down is the most important number on this page.

The likely path

If Papago Collection wins decisively

A published price, a real delivery date and half the wait is a far easier thing to sell than a design queue. The reasonable expectation is not a balanced mix. It is a business that drifts hard toward Papago Collection, year over year, because that is what customers keep choosing.

Drift path	Bays on Papago Collection	Total vans	Line : custom units	Revenue	Gross profit	Blended margin
TodayOrder book opens, nothing converts yet	0	36	—	$6.84M	$1.48M	21.6%
Year 1First bay converts once nine orders land	1	42	0.4 : 1	$7.56M	$1.59M	21.0%
Year 2Papago Collection pulls ahead, two more follow	3	54	2 : 1	$9.00M	$1.82M	20.2%
Year 3Settles here at a 3:1 sales mix	4	60	4 : 1	$9.72M	$1.93M	19.9%
Full conversionCustom discontinued. Shown for reference only.	6	72	all line	$11.16M	$2.16M	19.4%

Watch the last column on the way down. Every conversion lifts revenue faster than gross profit, so the blended margin falls the whole way, from 21.6% to 19.4%. That is not a flaw in Papago Collection, it is the chassis being a fixed cost on a smaller ticket. But it means Papago ends up building twice as many vans for 46% more gross profit, and everything that scales with unit count rather than revenue scales against it: warranty exposure, service load, delivery logistics, title and registration work, and chassis float. At 72 vans a year that float could run past $744,000. None of those costs are in the gross profit line above, and all of them grow faster than the margin does.

Why the drift stops short of six

A 3:1 sales mix only needs 3.6 baysBecause Papago Collection builds twice as fast, three times the unit demand is served by one and a half times the bay time. At the expected mix, custom still holds roughly 40% of the shop without anyone defending it.
Custom is the halo that prices Papago Collection$155,000 reads as a deal because a $190,000 bespoke build sits next to it. Discontinue the flagship and Papago Collection is no longer the accessible option, it is just the price.
Custom is the R&D departmentThree fixed plans go stale. The only reliable way to learn what plan four should be is to keep building what people ask for one at a time. Kill custom and Papago loses the pipeline that generates the next plan.
It is the only defensible groundAt full conversion Papago is a production Class B builder competing on price and delivery against companies with vastly better cost structure. Custom is the thing Winnebago cannot copy.
The last bay is the cheapest insuranceConverting bay six adds $114,000 a year. Keeping it on custom preserves the premium tier, the design capability and the brand story for exactly that much.

The counter, stated fairly

One bay may not be a real product lineSix custom vans a year is a trickle. It may be too small to keep a design team sharp or to carry a credible premium story, in which case it is sentiment rather than strategy.
Ownership may want the clean businessOne process, three plans, no exceptions, is a genuinely easier company to run and to eventually sell. Complexity has a cost this model does not price.
The drift may stall on its ownIf custom demand stays strong at four or five bays, the question never comes up and this section is moot.
Phase 4 is the better answerIf both lines are full, adding bays beats converting the last one. That is a nicer problem and it has its own pro forma.

The recommendation inside the recommendation. At a 3:1 sales mix the shop lands near four converted bays on its own, with two still on custom. That is a healthy place to stop and it needs no policy to enforce. The decision only becomes live if Papago Collection runs past 5:1, at which point treat two custom bays as a floor rather than a number to keep shaving. They cost $228,000 a year in forgone gross profit and they buy the premium anchor, the design capability and the one thing about Papago a production builder cannot copy.

The rule

Nine orders, or leave the bay alone

Converting a bay is not free. It gives up six custom vans a year worth $246,000 of gross profit, and replaces them with Papago Collection vans worth $30,000 each. That trade only works if the bay stays full.

Papago Collection vans a converted bay can build in a year, at one month each.

Orders a year needed just to match what the bay earned on custom. $246,000 divided by $30,000 is 8.2, so nine.

75%

Utilization a converted bay has to hold. Below that, the conversion destroys gross profit.

This is the single most useful number in the document. It turns an open-ended strategic bet into an operating rule anyone on the floor can apply: do not convert a bay until roughly three Papago Collection vans are sitting in its queue, and keep nine a year behind it. Convert early on thin demand and Papago trades $246,000 of proven custom gross profit for less. Convert late and it leaves $114,000 a year on the table per bay. The order book answers this, not a forecast.

The plan

Four phases, and only the first one needs a decision now

Each phase is funded by the one before it. Nothing commits Papago to the next step.

Phase 1

Open the order book

Now

Engineer the three plans, produce the renderings and marketing assets, publish a price and a delivery date. Production does not change at all. Every bay keeps building custom vans.

$125,000

Phase 2

Convert the first bay

At nine orders

Tooling, jigs and cabinet templates. One bay moves to Papago Collection. Five bays keep building custom. This is the first and only moment the existing line gives anything up.

$120,000

Phase 3

Convert on the rule

Per bay, as orders land

Each additional bay converts when it has nine Papago Collection orders a year behind it. No further capital. The mix finds its own level, set by what customers actually buy.

No new capital

Phase 4

Build new bays

Only when both lines are full

If custom demand holds at six bays and Papago Collection demand outruns the capacity it has absorbed, then and only then does adding physical capacity make sense. That decision has its own pro forma and it is not this one.

$713,000

Phase 1 is the only thing on this page that needs a yes right now. $125,000 buys three engineered plans, the renderings and photography to sell them, and a published price with a real delivery date. Production is untouched. If nothing sells, Papago is out the engineering and has a marketing asset library it can still use for the custom line. That is a small, bounded, recoverable downside against $114,000 a year per bay if it works.

Stress test

What has to be true

If the build is slower than promised

50% faster, base caseOne van per bay per month, twelve a year. A converted bay earns $360,000.
25% fasterSix weeks per van, eight a year. A converted bay earns $240,000, which is less than the $246,000 it earned building custom. At a 25% gain, conversion is not worth doing at all.
Break-even is a 33% time cutBelow that, leave the bays on custom. This is the assumption the whole proposal stands on and it is currently unverified.
Settle it before Phase 2, not before Phase 1Pull actual shop hours on the three most-repeated layouts already built. Phase 1 does not depend on the answer. Phase 2 does entirely.

If demand is thinner than hoped

The rule already handles itBays convert only when nine orders a year stand behind them. Thin demand means bays simply stay on custom and Papago earns what it earns today.
The real exposure is $125,000That is the whole downside of Phase 1. Everything after it is gated on orders that have already been taken.
Cannibalization is the subtle versionA buyer who would have paid $190,000 taking a $155,000 van costs $11,000 of gross profit. That only pays back if the freed bay time gets refilled, which is the same nine-order test.
Watch the mix, not the totalIf Papago Collection orders climb while custom orders fall by the same number, the order book looks healthy and gross profit quietly shrinks. Track them separately from day one.

Two more risks worth naming to ownership. First, the cost stack below gross profit is inferred. Chassis, Chandler rent and Phoenix wages are published, but the $155,000 price, the materials figure and the labor figure come from industry ranges rather than Papago's books, and they move every number here. Second, chassis working capital. Running Papago Collection on a batch cadence means chassis on the ground before they are sold, and at $62,000 each that float grows with every bay converted. It is recoverable cash, not a cost, but it has to be funded.

Recommendation

Approve Phase 1 and nothing else

Spend $125,000 to engineer three plans and put a price in the market. Leave all six bays on custom. Let the order book decide what happens next.

Why this and not a bigger commitment

It buys information, which is what is actually missingNobody at Papago knows what Papago Collection demand looks like, because Papago Collection has never been offered. $125,000 answers that question for real, and no amount of modeling can.
It risks nothing that is workingCustom production does not change by a single van. The flagship is untouched through Phase 1 and Phase 2 both.
Every later step is self-funding and gatedPhase 2 only happens with nine orders in hand. Phase 3 costs nothing. Phase 4 only comes up if both lines are full, which would be a very good problem.
Decide in advance where the drift stopsAdvertised pricing and faster delivery should push this hard toward Papago Collection, and at a 3:1 mix it settles near four converted bays on its own. Name the floor now anyway, because deciding it later one order at a time is how a flagship disappears by accident.
It gives marketing something to sellA published price and a real delivery date are what let a campaign quote a number. That is the mechanism that produces the nine orders, and it cannot start without Phase 1.

The strongest case against

The speed assumption is unverified and load-bearingA 50% time cut makes conversion worth $114,000 a bay. A 25% cut makes it worth less than nothing. Papago should confirm this from build records before Phase 2, and ownership may reasonably want it confirmed before Phase 1.
$125,000 is real money for a maybeThree engineered plans with no orders behind them is a genuine write-off if Papago Collection does not land. The marketing assets survive, the engineering largely does not.
It may just move the same buyers aroundIf Papago Collection converts people who would have bought custom anyway, Papago works harder for less gross profit per unit. The nine-order rule protects the bays, not the mix.
The whole cost stack is inferredEvery dollar on this page rests on a $155,000 price and a cost structure that came from industry ranges rather than Papago's books.

Two numbers from Papago's own records replace half the estimates on this page. Actual gross margin on the last ten Papago Custom builds, and actual shop hours on the three most-repeated layouts already delivered. The second one decides whether bays should ever convert at all.

Sources

Where the outside numbers came from

Unit volume and average ring-up came from Papago. These are the published figures behind everything else.

Winnebago Industries FY2025 results$2.8B net revenue, $365.1M gross profit, 13.0% gross margin, fiscal year ended August 30, 2025. winnebago.gcs-web.com
Thor Industries FY2025 resultsNorth American towable gross margin 14.7% for the full year; North American motorized near 7.8% in Q2. ir.thorindustries.com
2026 Sprinter chassis pricingCargo Van 2500, 170" wheelbase high roof from $57,540 MSRP; 170" extended high roof from $59,980. The $62,000 used here assumes a modestly equipped unit. mbvans.com
Chandler industrial lease ratesAverage asking rate for industrial space in Chandler at $18.12 to $18.15 per square foot, with LoopNet showing an average near $17. Used only in the Phase 4 estimate. commercialcafe.com
Phoenix trade wagesCabinet installer averages $23.69 an hour, or $49,277 a year. Journeyman electricians run $32 to $38 an hour, with most Phoenix placements near $35. Loaded cost assumed at roughly 1.3 times base. ziprecruiter.com · buildforce.com
Conversion cost rangesPremium Sprinter conversions from $80,000; interior materials and cabinetry $30,000 to $80,000 on luxury builds; custom build labor $25,000 to $75,000 or more. thevansmith.com · ultimatetoys.com
No industry benchmark existsThere is no published gross margin figure for direct-to-consumer custom van conversion. The comparables above are the nearest public proxies and they describe a different business model, which is stated plainly wherever they are used.

Let the marketpick the mix.