| Sample Cookbook Production Quote 2: Financial Analysis
Let's say that you are interested in producing a cookbook with specifications like the one in our example. Based on the analysis below, we can make the following conclusions:
- For sales of 6,000 books, your total potential profit is $82,472.
- For sales of 5,000 books, your total potential profit is $66,476.
- For sales of 4,000 books, your total potential profit is $50,061.
Quantity |
|
4,000 |
5,000 |
6,000 |
|
% direct to consumer |
60% |
2,400 |
3,000 |
3,600 |
|
% to retail stores |
10% |
400 |
500 |
600 |
|
% to wholesalers |
30% |
1,200 |
1,500 |
1,800 |
|
|
|
|
|
|
Unit cost |
|
$ 7.32 |
$ 6.54 |
$ 6.09 |
|
|
|
|
|
|
Suggested selling price |
|
|
|
|
|
Full retail (direct to consumer) |
24.95 |
24.95 |
24.95 |
|
% discount to retailers |
40% |
14.97 |
14.97 |
14.97 |
|
% discount to wholesalers |
55% |
11.23 |
11.23 |
11.23 |
|
|
|
|
|
|
Total gross revenues |
|
79,341 |
99,176 |
119,012 |
|
|
|
|
|
|
Total investment |
|
29,280 |
32,700 |
36,540 |
|
|
|
|
|
|
Total profit potential |
|
50,061 |
66,476 |
82,472 |
|
|
|
|
|
|
Return on investment |
|
171% |
203% |
226% |
|
|
|
|
|
|
Breakeven quantity |
|
1,476 |
1,649 |
1,842 |
This analysis is for illustrative purposes only. The exact sales mix will depend on your distribution and marketing approach. Actual required discounts and terms may vary among retailers and distributors.
|
|
