| Sample Cookbook Production Quote 3: 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 5,000 books, your total potential profit is $58,451.
- For sales of 4,000 books, your total potential profit is $44,481.
- For sales of 3,000 books, your total potential profit is $30,541.
Quantity |
|
3,000 |
4,000 |
5,000 |
|
% direct to consumer |
60% |
1,800 |
2,400 |
3,000 |
|
% to retail stores |
10% |
300 |
400 |
500 |
|
% to wholesalers |
30% |
900 |
1,200 |
1,500 |
|
|
|
|
|
|
Unit cost |
|
$ 5.68 |
$ 4.74 |
$ 4.17 |
|
|
|
|
|
|
Suggested selling price |
|
|
|
|
|
Full retail (direct to consumer) |
19.95 |
19.95 |
19.95 |
|
% discount to retailers |
40% |
11.97 |
11.97 |
11.97 |
|
% discount to wholesalers |
55% |
8.98 |
8.98 |
8.98 |
|
|
|
|
|
|
Total gross revenues |
|
47,581 |
63,441 |
79,301 |
|
|
|
|
|
|
Total investment |
|
17,040 |
18,960 |
20,850 |
|
|
|
|
|
|
Total profit potential |
|
30,541 |
44,481 |
58,451 |
|
|
|
|
|
|
Return on investment |
|
179% |
235% |
280% |
|
|
|
|
|
|
Breakeven quantity |
|
1,074 |
1,195 |
1,315 |
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.
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