Msg: 115 *Conference*
06-23-91 10:10:40
From: RICHARD HANSON
To : BOB GASKINS
Subj: REPLY TO MSG #113 (REPLY RE: M100 EXPANSION)
Bob: I understand your concerns about the price of RAM expansions for the Model 100/102 compared to the Mac and DOS worlds. I, too, have been doing some more thinking on the subject. It's true, the cost of the parts is very little. The street price reflects labor and marketing. I'll be open with you. We get a 30% margin on the products we buy from American Cryptronics. That means a $199.00 RAM Expanson Module costs our club $139.30; we make $59.70 gross profit on that one item. We will "maybe" sell 1 to 3 each month. Here are some questions to consider. Since I am doing my mid-year planning, let's explore these questions together. I'll just state the questions and let everyone work up some answers. * What are Club 100's strategic goals? * What is a reasonable ROI on our inventory dollar? * What is a resaonable income for myself? * How much are we spending on advertising? * What forms of marketing work, and to what extent? * What are the actual overhead costs? * How much (by percentage) overhead "load" should each item carry? * What is my "actual" ROI on money and time invested? * Should any of the items we sell be raised or lowered and why? * At what point do I consider this Club no longer profitable or fun and simply shut it down? This club stays alive because I want it to stay alive. There are a few times during the year, I have noted, that it DOES NOT support its own financial weight. Club 100 impacts thousands of people. In this regard Club 100 has a "certain" responsibility to stay around. The day will come when Club 100 can not afford to stay around. Luckly, today is not that day. But, everyone currently in support of the Model 100 marketplace is one inch (...or one month) from throwing in the towel, i.e., if Club 100 were to pull its ad from Portable 100 magazine, Portable 100 could not stand the impact and would fold; especially if "Nuge" were to pull his ads, as well. So now, the question remains: Why is RAM Expansion so high in the Model 100 marketplace? The answer involves, not the cost of the parts, but the business interests involved in bringing the parts into the marketplace. -Rick-