Cost Structure & Revenue Streams

There are several ways we have established that will help our business to make a profit.
When users sign up through the website they will need to give some general details, which can then be sorted into demographic information and sold onto businesses who wish to obtain this information.
The swipe cards will have a one off fee when they are initially purchased at, and will also cost users if they break or lose their cards.  That cost is currently estimated at around $10.00, to ensure a slight profit is still made when these are sold.
The app will have a one off charge when purchased of $1.29 to match the prices of the other apps in the iTunes store.
Installing and maintaining the scanner device inside the parking buildings.
The parking companies will lease our system, with an initial setup cost to install all the equipment as well as a monthly fee to cover maintenance and to bring in a profit.

In order to create, capture and deliver value to our customers our system will eliminate the need for paper tickets as well as having staff at the exits to collect money as people leave.  This reduces costs on our business, and therefore will save our customers money as we won’t have to charge as much for our other services.
Our users will also be part of a loyalty program, with the help of the local businesses around the parking buildings who will provide vouchers to their stores.
This will save our user’s money as well as help create more traffic into the local businesses in close proximity to our parking buildings.

Initially our system will be aimed at the smaller parking businesses such as Care Park and Tournament in the Wellington region.  Further down the track however it could be applied to much busier cities such as Auckland; that would have a high demand for a system such as ours.  Ultimately our system could be applied throughout New Zealand, or even internationally.
We could also increase partnerships with a larger number of parking companies and buildings once we have built up a strong client base.

In order to increase the amount of sales we would take advantage of two key forms of advertising to get our name out into the public;

Newspaper Advertisements
Newspaper advertisements will be our main way of getting word out to commuters on public transport.  Since a lot of users of public transport read the paper on their journey this would be an effective way of getting word out to them and offering them another easier way of getting to work.
This is also an effective way of getting word out to a great number of people since newspapers are commonly read by people of different ages.
Newspapers reach the maximum amount of viewers; on average about four times as much as radio per week.  The Dominion Post specifically, in a single issue reaches 131,000 or 42% of all people over the age of 15 in Wellington.

Radio Advertisements
Radio advertisements will be the secondary form of advertising that we would focus on, especially during early morning and late afternoon times.
This is during the peak hour times when people are driving to and from work and when they are most likely to be listening to the radio.  This means we will be targeting our main audience which would be commuters who drive in and out of Wellington City on a regular basis.

 

Profit and Loss Forecast

For each costing we have set up a pack that we would offer to CarePark as an initial starting point to completely outfit 10 of their buildings including 2x sensors, 2x barcode reader and a wireless transmitter to make sure it all connects back to our online system.

Pessimistic
The pessimistic profit and loss forecast is focused on looking at if all of the hardware and software is as expensive as our research has suggested, lower charges and less apps and swipe cards sold. 

Breakdown of Costs:
$33,500 for all of the raw materials to outfit the buildings
Charged at $35,000
1,000 apps at $1.29 each
2,000 cards at $10.00 each
$2,605 to produce

Total Income: $56,280
Direct Costs: $36,105
Gross Profit: $20,175
Total Overheads: $209,789
Operating Profit: -$189,614

Optimistic
The optimistic forecast is the opposite of the pessimistic version.  It is focused on the cheapest prices for hardware and software, as well as the highest we could charge for our system and selling a high amount of apps and swipe cards.

Breakdown of Costs:
$28,000 for all of the raw materials to outfit the buildings
Charged at $35,000
2,000 apps at $2.59 each
4,000 cards at $10.00 each
$2,605 to produce

Total Income: $80,180
Direct Costs: $33,210
Gross Profit: $46,970
Total Overheads: $82,989
Operating Profit: -$36,019

Realistic
The realistic forecast is based on the most accurate prices we would charge and spend based on the research done on current market prices for our various costs.

Breakdown of Costs:
$30,600 for all of the raw materials to outfit the buildings
Charged at $35,000
2,000 apps at $1.29 each
4,000 cards at $10.00 each
$2,605 to produce

Total Income: $77,580
Direct Costs: $35,810
Gross Profit: $41,770
Total Overheads: $88,590
Operating Profit: -$46,820

Our assumptions behind our sales forecast for the coming year are based on how many sales we would actually make.  We have estimated as best we can based on the size of the city we are based in.  Although the costs for the majority of the materials are based off of our research and are as accurate as possible.

Internal or external events that could alter or threaten our assumptions are things such as price increases since our research or being unable to get the company on board. Another factor would be if we purchase and produce more products than we are able to on sell; specifically the swipe cards and not being able to get the programming costs back for the app.

 

Your Costs

Variable Costs
In order to produce the swipe cards it would cost $1.51 per card including GST, but this includes multiple features such as signature strip, security strip, barcodes and the set up fee.
To produce 2,000 cards as a starting point would cost $2,605.
Currently the sale price per card would be $10.00, after taking out manufacturing costs, postage or store fee (which are both the same at $1.40) and GST the profit per card would total $5.54.
Total profit of selling 2,000 cards with all these fees included would be $11,080.

Sensors that would be placed at both the entrance and exit of the building to keep track of how many cars are inside the building at all times.
The cost of the sensors would be approximately $60 to $100 as well as a one off cost of around $2,000 to initially program the arduino system to be capable of calculating how many cars are coming and going from the building at all times.

Website hosting will cost $14.95 per month, which includes a secure site with CGI and PHP, domain name, 25 POP email addresses, 100MB disc space and 4GB of traffic a month.

Our advertising costs are extremely accurate due to the information that the Herald offers.  If we were to advertise with them, on one weekday, once a month it would cost us $2,871 each month.  Due to the high cost of advertising we have decided to advertise once a month, for the initial six months to get our name out into the public.

Fixed Costs
Office space including rent, phone line with own DDI (direct dialing inwards), internet, electricity, furnishings, cleaning, 24/7 swipe card access and an onsite manager will cost $9,000.00 pa; $750.00 a month.

Other costs such as legal fees and accounting were estimated based off of our research at $1,000 per month for each one.

 

Cash Flow Forecast

 

Capital Expenditure Budget
capital items you need to buy

Breakeven Calculation