Kip wrote:If any company doesn't know what their margin is, good bad or indifferent, they will not be in business very long. Not knowing the cost of goods does not allow you to set a proper selling price to make a minimum profit.
Without a profit I become a non-profit organization covered by different laws.
Of course. That's a world away from knowing the margin on each piece within a range.
Robin
My statement was general, but the reality is not. You must know your margins on each product or your are in the same boat. I cannot be looking for a net year end profit of a given percentage if I am selling some products at a loss all the time. Loss leaders and promotions can be factored overall but continuous losses on a given product or line will adversely affect my overall margins. I must make it up somewhere else so must decide what products can withstand the market at additional margins. Therefore I must know my margins or I will be making guesses that can affect my overall business.
It would be silly for me to think that I could operate my business without knowing margins on every product I sold. they may vary by sku, but I will know them, where they stand against the same or similar items in the marketplace, and how they affect my bottom line based on the volume of sales per unit.
Kip
"Asylum Administrator"
Visit the CWArchives for everything CW. Historical, specs, manuals and resale. It is all there.
Kip wrote:If any company doesn't know what their margin is, good bad or indifferent, they will not be in business very long. Not knowing the cost of goods does not allow you to set a proper selling price to make a minimum profit.
Without a profit I become a non-profit organization covered by different laws.
Of course. That's a world away from knowing the margin on each piece within a range.
Robin
My statement was general, but the reality is not. You must know your margins on each product or your are in the same boat. I cannot be looking for a net year end profit of a given percentage if I am selling some products at a loss all the time. Loss leaders and promotions can be factored overall but continuous losses on a given product or line will adversely affect my overall margins. I must make it up somewhere else so must decide what products can withstand the market at additional margins. Therefore I must know my margins or I will be making guesses that can affect my overall business.
It would be silly for me to think that I could operate my business without knowing margins on every product I sold. they may vary by sku, but I will know them, where they stand against the same or similar items in the marketplace, and how they affect my bottom line based on the volume of sales per unit.
What do you manufacture Kip, how many lines in your production schedules and what warranty do you give?
Having sat with CW and talked about his business etc. for several hours - I would say that he has a very detailed / analytical understanding of his business numbers / model / strategy. One of the more switched on SME owners I have met - and I spend my life working with them!
In a world of computers / spreadsheets / databases / itemised costs - it is not difficult to know exactly the cost of anything / everything. Got the cost model for a watch? Want blue hands instead - run a script against the additional cost of the hands / quantity break points / costs of labour to switch them in - result.
How otherwise does CWL know the minimum quantity they need to make for LEs?
For anyone to imply that CW doesn't know such detailed figures, they clearly have no understanding of business in today's world.
Alasdair
Tracking Christopher Ward watch prices on ebay globally at Watchroll
Tracking Bremont watch prices on ebay globally at Watchtrace
robinbarke wrote:Just a discussion of conflicting views. The stuff of forums and much more interesting than the constant babble of "my new acquisition"
Robin
Perhaps more interesting to you, but not necessarily to others. I'm not sure if I'd define the full and frank exchange of views expressed here today as the 'stuff of forums.' For me, life has enough conflict and I seek something a little more calming on the forum. But if you find it interesting and a source of stimulation then please ignore our 'constant babble' and we will ignore your 'discussion'.
robinbarke wrote:Just a discussion of conflicting views. The stuff of forums and much more interesting than the constant babble of "my new acquisition"
Robin
as much as I enjoy this forum, I must say I enjoy the constant babble of 'my new acquisition' far more than this inane babble
robinbarke wrote: but so is the cost of the five year unlimited warranty. And all the vagaries associated with it. Do, for example you build in the same after sales costs for the C60 as the C9.
Robin
This is all getting off topic but there is one element of your argument that I agree with. The 5 year warranty is essentially a 5 year put option and pricing that is actually very difficult to do well. No-one really knows what he failure rate will be for a watch design although you can take a good educated guess. The business also incurs significant FX risk with the pound vs the Swiss Franc and well as Euro and USD fluctuations. I have no idea if this has been locked in with an FX swap but predicting the profit of a watch is tricky, especially the FLE which had it's price announced almost a year before it had actually been built.
robinbarke wrote: but so is the cost of the five year unlimited warranty. And all the vagaries associated with it. Do, for example you build in the same after sales costs for the C60 as the C9.
Robin
This is all getting off topic but there is one element of your argument that I agree with. The 5 year warranty is essentially a 5 year put option and pricing that is actually very difficult to do well. No-one really knows what he failure rate will be for a watch design although you can take a good educated guess. The business also incurs significant FX risk with the pound vs the Swiss Franc and well as Euro and USD fluctuations. I have no idea if this has been locked in with an FX swap but predicting the profit of a watch is tricky, especially the FLE which had it's price announced almost a year before it had actually been built.
I agree. Your point is very well made. There are a number of other variables too which I don't think the forum wishes to hear so I will not prolong the agony.
bootsy wrote:This is all getting off topic but there is one element of your argument that I agree with. The 5 year warranty is essentially a 5 year put option and pricing that is actually very difficult to do well. No-one really knows what he failure rate will be for a watch design although you can take a good educated guess. The business also incurs significant FX risk with the pound vs the Swiss Franc and well as Euro and USD fluctuations. I have no idea if this has been locked in with an FX swap but predicting the profit of a watch is tricky, especially the FLE which had it's price announced almost a year before it had actually been built.
It can be complex - but it can also be managed.
- Movements are likely to be the biggest issue and I would expect there to be prior knowledge on % failure / warranty claims from the movement manufacturer. Cases are likely to be a minimal issue, and straps are reasonably predictable as well.
- I would definitely expect any business with a substantial element of FX to manage it in some form - so that should be predictable within certain time spans.
There will always be a % variation as it is impossible to predict or manage everything, but I would expect figures to be reasonably well known.
Alasdair
Tracking Christopher Ward watch prices on ebay globally at Watchroll
Tracking Bremont watch prices on ebay globally at Watchtrace