Build to Order vs Build to Stock

	A	B	C	D	E	F	G	H	I	J	K
1		Widget price:	$100	Build to Order				Build to Stock

2	A related study I did. This sheet compares cash flow for Build to Order (BTO) vs Build to Stock (BTS) for a very popular widget sold at $100. BTO is not sensitive to Cost of Goods Sold (COGS); BTS is. If e.g. your COGS approaches half your unit price and you use BTS, you'll have almost no chance of getting your business off the ground. But with BTO your cash flow explodes.
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11		Red: COGS@$49
12		Orange: COGS@$40
13		Green: COGS@$10
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15					$49	<-- Unit COGS
16	Month	Orders	Revenue	Widgets Built	Cost	Gross Margin	Cash on Hand	Widgets Built	Cost	Gross Margin	Cash on Hand
17	0	0	$0	0	$0	$0	$0	0	$0	$0	$7,168
18	1	0	$0	0	$0	$10,000	$10,000	100	$4,900	-$4,900	$2,268
19	2	100	$10,000	100	$4,900	$20,100	$30,100	250	$12,250	-$2,250	$18
20	3	250	$25,000	250	$12,250	$37,750	$67,850	500	$24,500	$500	$518
21	4	500	$50,000	500	$24,500	$75,500	$143,350	1000	$49,000	$1,000	$1,518
22	5	1000	$100,000	1000	$49,000	$151,000	$294,350	2000	$98,000	$2,000	$3,518
23	6	2000	$200,000	2000	$98,000	$302,000	$596,350	4000	$196,000	$4,000	$7,518
24	7	4000	$400,000	4000	$196,000	$604,000	$1,200,350	8000	$392,000	$8,000	$15,518
25	8	8000	$800,000	8000	$392,000	$1,208,000	$2,408,350	16000	$784,000	$16,000	$31,518
26	9	16000	$1,600,000	16000	$784,000	$2,416,000	$4,824,350	32000	$1,568,000	$32,000	$63,518
27	10	32000	$3,200,000	32000	$1,568,000	$4,832,000	$9,656,350	64000	$3,136,000	$64,000	$127,518
28	11	64000	$6,400,000	64000	$3,136,000	$9,664,000	$19,320,350	128000	$6,272,000	$128,000	$255,518
29	12	128000	$12,800,000	128000	$6,272,000		$19,320,350
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31					$40	<-- Unit COGS
32	Month	Orders	Revenue	Widgets Built	Cost	Gross Margin	Budget	Widgets Built	Cost	Gross Margin	Budget
33	0	0	$0	0	$0	$0	$0	0	$0	$0	$4,000
34	1	0	$0	0	$0	$10,000	$10,000	100	$4,000	-$4,000	$0
35	2	100	$10,000	100	$4,000	$21,000	$31,000	250	$10,000	$0	$0
36	3	250	$25,000	250	$10,000	$40,000	$71,000	500	$20,000	$5,000	$5,000
37	4	500	$50,000	500	$20,000	$80,000	$151,000	1000	$40,000	$10,000	$15,000
38	5	1000	$100,000	1000	$40,000	$160,000	$311,000	2000	$80,000	$20,000	$35,000
39	6	2000	$200,000	2000	$80,000	$320,000	$631,000	4000	$160,000	$40,000	$75,000
40	7	4000	$400,000	4000	$160,000	$640,000	$1,271,000	8000	$320,000	$80,000	$155,000
41	8	8000	$800,000	8000	$320,000	$1,280,000	$2,551,000	16000	$640,000	$160,000	$315,000
42	9	16000	$1,600,000	16000	$640,000	$2,560,000	$5,111,000	32000	$1,280,000	$320,000	$635,000
43	10	32000	$3,200,000	32000	$1,280,000	$5,120,000	$10,231,000	64000	$2,560,000	$640,000	$1,275,000
44	11	64000	$6,400,000	64000	$2,560,000	$10,240,000	$20,471,000	128000	$5,120,000	$1,280,000	$2,555,000
45	12	128000	$12,800,000	128000	$5,120,000		$20,471,000
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47					$10	<-- Unit COGS
48	Month	Orders	Revenue	Widgets Built	Cost	Gross Margin	Budget	Widgets Built	Cost	Gross Margin	Budget
49	0	0	$0	0	$0	$0	$0	0	$0	$0	$1,000
50	1	0	$0	0	$0	$10,000	$10,000	100	$1,000	-$1,000	$0
51	2	100	$10,000	100	$1,000	$24,000	$34,000	250	$2,500	$7,500	$7,500
52	3	250	$25,000	250	$2,500	$47,500	$81,500	500	$5,000	$20,000	$27,500
53	4	500	$50,000	500	$5,000	$95,000	$176,500	1000	$10,000	$40,000	$67,500
54	5	1000	$100,000	1000	$10,000	$190,000	$366,500	2000	$20,000	$80,000	$147,500
55	6	2000	$200,000	2000	$20,000	$380,000	$746,500	4000	$40,000	$160,000	$307,500
56	7	4000	$400,000	4000	$40,000	$760,000	$1,506,500	8000	$80,000	$320,000	$627,500
57	8	8000	$800,000	8000	$80,000	$1,520,000	$3,026,500	16000	$160,000	$640,000	$1,267,500
58	9	16000	$1,600,000	16000	$160,000	$3,040,000	$6,066,500	32000	$320,000	$1,280,000	$2,547,500
59	10	32000	$3,200,000	32000	$320,000	$6,080,000	$12,146,500	64000	$640,000	$2,560,000	$5,107,500
60	11	64000	$6,400,000	64000	$640,000	$12,160,000	$24,306,500	128000	$1,280,000	$5,120,000	$10,227,500
61	12	128000	$12,800,000	128000	$1,280,000		$24,306,500
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