Page 77 - Paulisms: Gold Nuggets for Small Business

A Number units currently sold per month
B Current selling price
C Total turnover per month
D Current cost
E Gross profit/margin each
widget
F Overheads
G Net profit each
H Total net profit per month
50
$1000 (exclude GST from the equation) $50,000 (AxB)
$500 (materials, Cost of Goods (COGS)) per unit $500 (sell price less COGS (B-D))
$300 (rent, insurance, wages, etc.)
$200 (selling price less COGS less overheads (B-D-F)) $10,000 (AxG) = $120,000 per year
EXTRADITE WORK:
MANUFACTURE BY OTHERS/ OUTSOURCE/ USE CONTRACTORS/ INSTALLED BY OTHERS
I Cost of extra Widgets per unit
J Extra Widgets per month going down through the
funnel’s top lip (extra sales) as a result of contracting/outsourcing
K Extra turnover
L Total turnover per month
M Extra COGS (Cost of Goods)
N Extra overheads
O Net profit each extradited widget
P Extra net profit for month
Q Now total net profit for the
$800 ($300 more than your own cost of $500 per unit) 35 (for example)
$35,000 (JxB)
$85,000 (C+K)
Zero (included in the outsourcing)
Zero (included in the outsourcing). There may be some extra administration work.
$200 (B-I). This is beautiful, clean net profit.
$7,000 (OxJ; $20x35 units) $17,000 (H+P)