Originally Posted by thenetworkbabe:
“Because if she sells 100,000 tights, at a 40% profit they make 1.4 million. At low cost, you need to sell many more, and the profit per tight is tiny. Cheaper may prove better, once you can afford to research the market properly, but she plumped for expensive. Many overhead costs will remain the same, and some - like storage costs - will be lower, for fewer of an expensive product, and you may. get more money back quicker?
Lord Sugar wants a big return on his 250k. So less exciting figures may be fatal.
And if Mark has his wage slaves out there visiting 5 days a week, at two customers a day, at £400 a visit, hes going to pull in £200k from each worker - who cost him 20- 25k and some fuel. Mark can get to similar figures with half a dozen workers, a full timetable, and some bigger customers.
Bianca has to match Mark's offering. Either she suggest a much bigger market exists at a lower price, or there's still an adequate smaller one at a much higher price.
The better contestants who were not there were offering him too little money, or needing far more, and offering much more risk . Katie's restaurant was offering healthy food - which may be relatively cheap .He suggested some figures for how litlle it could earn given the numbers of meals it could sell, and how much it would have to pay out for staff, and food . He was talking tens of thousands of profits - not hundreds of thousands. Equally Roisin needed much more than 250k , and posed bigger risks than Bianca , let alone Mark. Once you take out the unviable ideas ,and the viable ones returning too little, or risking too much, or needing too much effort, he probably ended up with two of the few in his right ballpark?”
Your principle is fine but the numbers are a bit out of kilter. Remember, Bianca's £35 was the retail selling price (which includes 20% VAT). She would sell to the retailer at much less than £35 because the price includes the retailer margin. (Plus there may be an intermediate distributor involved too, who would also take a margin - big businesses will typically not take deliveries from small suppliers, as it's too fiddly.)
So Bianca would be selling in to the retailer/distributor at, say, £10 per pack. Assume her margin net of manufacturing costs etc is 70% (I'm making that up, but probably ballpark), and she makes a gross profit of £3 per pack - so on 100,000 sales that's a £300,000 gross profit.
Then subtract overhead costs, salary costs, etc, and her net profit will be much lower still.
Of course, the £35 is redundant. By her pitch she was down to £20 and she's now confirmed she's planning to retail at £7.99.
