|
Projected
Gross Profit |
| Most manufacturers
would probably want to double the cost of production (AUD $60) to sell at
$120 to a distributor, so the gross margin will be AUD $60. If distributors buy for $120 each, they will probably use a 50% markup to sell to the end user (owner/operator) for $180. This sits very nicely with the cost of other brands and types and it is certainly a price that the end user can afford, given the huge cost savings Rollfast Mark II offers. The cost saving is proven in other pages on this website. In reality, the sales and gross profit may look like this, based on what happened in New Zealand with Mark I and the information from the Likely Sales Volume page. Note: the figures below refer to when you start trading, which may be over a year from the moment you decide to proceed.
Thus, once the market is "mature" in year four, we believe the annual gross profit will be in excess of AUD $30 million and if the search for distributors has been diligent, it could be more, even way more. The above figures will become more real to you when you have read the other pages on this website. Most accountants today would regard a 33% return on investment as good business. You can invest in this venture for around AUD $600,000 so how excited is your accountant going to be when he sees you get that back in the third year? Our plastics engineer suggests the estimated cost of the tooling would be around USD $200,000 (around AUD $300,000). There are two main parts required and five smaller parts; one set of (the major) tooling can produce about 350,000 a year running 24/7 (each 'shot' takes 1.5 minutes for the two larger parts), so you need to budget for a second set of tooling by year 2 or 3. Once you have placed a contract with an injection moulder, you make it permanent! Production of parts can happen anywhere in the world at much the same price as the labor input is minimal until you get to the assembly, packing and shipping stage. |