Question

Hey please help me out in this personal business related question!(wholesale)

Take in consideration prior to this question I have done benchmarking in prices.

Ok so im selling this product that happily costs me to produce about $5 each piece and I’m selling it for $8 each piece to stores in which I do free delivery too since I deliver only here in the state area. I make delivery amounts of $350, $500, and even $850 daily with some of them paying net30 and others instantly...

But is very stressful to make this as I also pay my only 3 workers individual $400 a week for 10 hrs each day but hence they do indeed produce me about 400 pieces a day.

My question is;

1)Am i selling it to cheap?

2)Should I Eliminate a factor : Free deliver?

Net 30 days?

To much employers?

3)Never make them by a amount of $500 or less?

Because customers want more and more as they keep calling me but then again I don’t know if I’m making enough profit for my $2000 a month expenses as I feel I should be making more money even though Is carrying me for a living as of now.

Answer 1

	Facts provided
				Amount in $
	Costing per Piece			5
	Selling Price			8
	Workers			3
	Pay to workers			400 /week
	Per Day Production			400 pieces
	Delivery amounts			350
				500
				850
	Assumptions
	1)	Present costing amounting to 5 $ includes all expenses (including payment to workers) except delivery cost.
	2)	30 working days in a month.
	Answer
1)	Is product selling price is cheap?
	Selling price			8
	Cost price			5
	Profit per piece			3
	% of Profit on cost			60%
	No, Price which is giving 60% profit margin is quite good.
2)	Elimination of free delivery ?
	This question is depends on very variables like-
	a	Distance of delivery
	b	Frequency of delivery
	c	Mode of delivery- vehicle used
	d	fuel cost
	as all these details are not available hence surely can't comment.
	If delivery cost comes around the range of within 10% of cost it is better to offer free delivery
	as it is a factor which help to increase the volume of business.
	If it makes substantial amount than markup in selling price can be added.
2a	Too much employees
	Average product sale is			=(350+500+850)/3
				566.67	$
	Seliing price per piece			8	$
	In pieces			71
	Weekly sale			497
	As per employee is making 400 pieces in a day.
	Hence work can easily be done by one worker in part time.
	Huge employee cost can be saved by doing this work on job basis/per piece basis
	Instead of giving fixed salary to employees .
3)	Never make them by a amount 500$ or less ?
	Per order contribution is depend on fixed and variable cost.
	As in 500$ order approx 63 pieces sold having cost of 315 $ if
	fixed cost can be absorb by marking of (500-315) =185 $ then
	It should be done otherwise below size order should not be accpted
4)	As Monthly expense are $ 2000
	These can be earned by selling				=2000/3
					667
	Which can easily be done by two week sale, which is quite good.
	Only this which matters is size and volume of business
	If sale quantity increased than delivery cost will become meager
	and monthly margins become large.
	Hence it is advised that make all effort to increase the size of business.