A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1 | Income Statement - CaffCap | |||||||||||||||||||||||||
2 | Year 1 | Year 2 | Year 3 | Rationale | Links | |||||||||||||||||||||
3 | Revenue | |||||||||||||||||||||||||
4 | Product | # Units Sold | 50,000 | 85,000 | 160,000 | Ember cup - a similar product - got 100,000 sales in the first year, so taking a reasonable estimate, we get 50,000. Our complete target market consists of around 30 million people, so to get 0.001% of them as first adopters would be reasonable. As the buisness grows through sales and markeing, the numbers grow 1.7x in year 2 and 1.88x in year 3, a similar trend is seen across competitor products | Link | |||||||||||||||||||
5 | Price per Unit | $18 | $18 | $18 | Price set based on other similar products and customer answers to interview questions and stays constant across years to gain a loyal customer base | |||||||||||||||||||||
6 | Revenue from selling product | $900,000 | $1,530,000 | $2,880,000 | (# Units sold)*(Price per unit) | |||||||||||||||||||||
7 | App (Freemium Model) | # of App Members | 47,500 | 80,750 | 152,000 | We assume 95% of people who buy the cap will also download the accompanying app based on the interviews | ||||||||||||||||||||
8 | Price of Premium Subscription | $5 | $5 | $5 | Interviewing our consumers indicated $5 was a reasonable price for premium features which improve data tracking, price again stays constant for the first three years to gain a loyal consumer base | |||||||||||||||||||||
9 | % of Members with Premium | 5% | 6% | 6.50% | Around 5% (as indicated by interviews) will upgrade to premium, as better caffeine data tracking will be appealing only to a select few customers with more severe caffeine problems (such as those that are recommended to limit caffeine intake by a doctor). Through advertising and slowly increasing premium features, we will gain premium membership | |||||||||||||||||||||
10 | Revenue from Subcriptions | $11,875 | $24,225 | $49,400 | (Price of premium subscription)(# Free users)(% Members with premium) | |||||||||||||||||||||
11 | Total Revenue (# Units sold)*(Price per unit) + (Price premium subscription)*(# Free Users)*(% of Members with premium) | $911,875 | $1,554,225 | $2,929,400 | Calculated through adding revenue from selling product + revenue from subscriptions | |||||||||||||||||||||
12 | ||||||||||||||||||||||||||
13 | Cost of Goods Sold (COGS) | |||||||||||||||||||||||||
14 | Costs | Production Factory (outsourced) per year | $20,000 | $22,500 | $25,000 | To outsource product to a factory in China for one year, it would cost 10,000 to 50,000 dollars per year. Given we are a small factory with a non-labour intensive product, we can assume it would be on the lower end of that spectrum. As production increases, factory size and cost will increase to accomodate this. | Link | |||||||||||||||||||
15 | Shipping per year + delivery cost | $45,000 | $76,500 | $144,000 | It will cost approximately 25 cents per unit to ship from factories abroad + 65 cents per unit for delivery | Link | ||||||||||||||||||||
16 | Investory storage | $2,500 | $3,700 | $4,300 | The cost for storage of our product in an inventory will cost approximately 2500$ and will increase as our production increases but by lesser due to economies of scale | Link | ||||||||||||||||||||
17 | Worker Wage per Unit | $1.00 | $0.90 | $0.75 | Given a worker could make around 6 units per hour and the average Chinese factory worker makes around $6 per hour, hour wage per unit would be $1; later, workers will become more experienced and make more units in an hour, so wage per unit will reduce | Link | ||||||||||||||||||||
18 | Electronics per Unit | $12 | $10 | $8 | Together, the custom pcb (5.5$), battery (1$), flow sensor (3.5$), accelerometer (1.2$), mini breadboard (0.5$), leds (0.1$) and other wiring (0.2$) will cost 12$ in the first year and be brought down to 8$ by the third year due to ramping up production and procuring the raw materials in bulk | Link | ||||||||||||||||||||
19 | Physical Cap 3D printed | $0.50 | $0.50 | $0.50 | The plastic for the cap is very cheap and can be produced at a mass scale at a low cost | |||||||||||||||||||||
20 | Total COGS (Production factory + Shipping + (Wages + Electronics + Cap)*Units) | $742,500 | $1,071,700 | $1,653,300 | Obtained though adding the individual costs | |||||||||||||||||||||
21 | Gross Margin | $169,375 | $482,525 | $1,276,100 | Total Revenue - Total COGS | |||||||||||||||||||||
22 | ||||||||||||||||||||||||||
23 | Operating Expenses (OPEX) | |||||||||||||||||||||||||
24 | Sales and Marketing | Tiktok (Influencers + Promoted Ads) | $21,000 | $23,000 | $24,500 | TikTok advertising will be a focus of our campaign. Specifically, mid-sized influencers, who have a following in the lifestyle and health industry. For each post, micro-influencers cost 50-200 dollars and macro-influencers cost around $700 | Link | |||||||||||||||||||
25 | $16,000 | $17,000 | $18,750 | Instagram ads are minimally expensive per click and view; they cost between $0.20 to $2 per click, and $0.01 to $0.05 per ad view | Link | |||||||||||||||||||||
26 | Google promoted websites | $60,000 | $72,000 | $80,000 | The average small- to mid-size business spends anywhere from $12,000 to $120,000 per year; since we are a new buisness and want to grow as much as possible, we will spend more | Link | ||||||||||||||||||||
27 | Total Sales and Marketing | $97,000 | $112,000 | $123,250 | Tiktok + Instagram + Google | |||||||||||||||||||||
28 | Other OPEX | General and Admin | $30,000 | $55,000 | $68,000 | We, the founders will be working mostly for free in order to grow the business, but we will still need to pay for our workspace, food and transportation. As we make more money, greater salaries can be given to us, the founders. | ||||||||||||||||||||
29 | R&D | $25,406 | $72,379 | $191,415 | On average, leading software companies invest between 10–15% of their revenue in R&D; as we want to innovate and improve our product, we will reinvest 20% | Link | ||||||||||||||||||||
30 | Total Other OPEX | $55,406 | $127,379 | $259,415 | General and Admin + R&D | |||||||||||||||||||||
31 | Total OPEX | $152,406 | $239,379 | $382,665 | Sales and Marketing + Other OPEX | |||||||||||||||||||||
32 | ||||||||||||||||||||||||||
33 | Pre-Tax Income | $16,969 | $243,146 | $893,435 | Gross Margin - Total OPEX | |||||||||||||||||||||
34 | Taxes (25%) | $4,242 | $60,787 | $223,359 | 25% flat tax rate as mentioned in the assignment | |||||||||||||||||||||
35 | Net Income | $12,727 | $182,360 | $670,076 | Pre-tax income - taxes | |||||||||||||||||||||
36 | ||||||||||||||||||||||||||
37 | ||||||||||||||||||||||||||
38 | ||||||||||||||||||||||||||
39 | ||||||||||||||||||||||||||
40 | ||||||||||||||||||||||||||
41 | ||||||||||||||||||||||||||
42 | ||||||||||||||||||||||||||
43 | ||||||||||||||||||||||||||
44 | ||||||||||||||||||||||||||
45 | ||||||||||||||||||||||||||
46 | ||||||||||||||||||||||||||
47 | ||||||||||||||||||||||||||
48 | ||||||||||||||||||||||||||
49 | ||||||||||||||||||||||||||
50 | ||||||||||||||||||||||||||
51 | ||||||||||||||||||||||||||
52 | ||||||||||||||||||||||||||
53 | ||||||||||||||||||||||||||
54 | ||||||||||||||||||||||||||
55 | ||||||||||||||||||||||||||
56 | ||||||||||||||||||||||||||
57 | ||||||||||||||||||||||||||
58 | ||||||||||||||||||||||||||
59 | ||||||||||||||||||||||||||
60 | ||||||||||||||||||||||||||
61 | ||||||||||||||||||||||||||
62 | ||||||||||||||||||||||||||
63 | ||||||||||||||||||||||||||
64 | ||||||||||||||||||||||||||
65 | ||||||||||||||||||||||||||
66 | ||||||||||||||||||||||||||
67 | ||||||||||||||||||||||||||
68 | ||||||||||||||||||||||||||
69 | ||||||||||||||||||||||||||
70 | ||||||||||||||||||||||||||
71 | ||||||||||||||||||||||||||
72 | ||||||||||||||||||||||||||
73 | ||||||||||||||||||||||||||
74 | ||||||||||||||||||||||||||
75 | ||||||||||||||||||||||||||
76 | ||||||||||||||||||||||||||
77 | ||||||||||||||||||||||||||
78 | ||||||||||||||||||||||||||
79 | ||||||||||||||||||||||||||
80 | ||||||||||||||||||||||||||
81 | ||||||||||||||||||||||||||
82 | ||||||||||||||||||||||||||
83 | ||||||||||||||||||||||||||
84 | ||||||||||||||||||||||||||
85 | ||||||||||||||||||||||||||
86 | ||||||||||||||||||||||||||
87 | ||||||||||||||||||||||||||
88 | ||||||||||||||||||||||||||
89 | ||||||||||||||||||||||||||
90 | ||||||||||||||||||||||||||
91 | ||||||||||||||||||||||||||
92 | ||||||||||||||||||||||||||
93 | ||||||||||||||||||||||||||
94 | ||||||||||||||||||||||||||
95 | ||||||||||||||||||||||||||
96 | ||||||||||||||||||||||||||
97 | ||||||||||||||||||||||||||
98 | ||||||||||||||||||||||||||
99 | ||||||||||||||||||||||||||
100 |