Reply to: Increasing profits

[Paddy]

www.peeseeworld.com is available.

[d000hg]

I have got some prices out of them in the meanwhile. I did some background research and most retailers won't bother unless they can make between 15 and 40% profit.

So I took the pricelist, added a 15% and 40% column and then went shopping online. Eerily the prices from other online retailers were identical to my 40% column.

So now, a 25 pack of DVDr costs £3.50, and sells for £4.90. Plus shipping obviously. A whopping £1.40 profit, that's eaten into with packaging and labelling and wage costs.

So, it makes more sense to stock higher priced items. 40% of FA is FA. 40% of a £100 item however.

So the problem is not being able to sell at a profit. It's convincing people why they should buy from you, rather than the other hundred or so online shops. It's like when I use Kelkoo to find the cheapest place for some DVD boxset. Big names are always in the top, but there's usually some random site like buysomecheapdvdsnow.com 50p cheaper... and for that kind of saving I choose the company I have heard of.

[Tarquin Farquhar]

even at today's paltry interest rates?

They'd be investing it, not putting it int he same bank accounts as you and me.

That's been the insurance company model for a long time: they don't make money out of any difference between premiums and payous, they make money from the fact that they get to hold the premiums for a while before paying out. Good investing of this money is vital for an insurance company.

[sasguru]

More in my future book with working name "Legends of SKA" - I'll have a big chapter dedicated to CUK

I hope you'll describe my huge efforts to encourage you

[suityou01]

Getting somewhere

Found a wholesaler with proper wholesale prices.

I cannot send the application forms to them as my scanner is broken.
Well more pertinently I cannot reinstall the software as it says "Already installed"

Buuuuuuuuut

I have got some prices out of them in the meanwhile. I did some background research and most retailers won't bother unless they can make between 15 and 40% profit.

So I took the pricelist, added a 15% and 40% column and then went shopping online. Eerily the prices from other online retailers were identical to my 40% column.

So now, a 25 pack of DVDr costs £3.50, and sells for £4.90. Plus shipping obviously. A whopping £1.40 profit, that's eaten into with packaging and labelling and wage costs.

So, it makes more sense to stock higher priced items. 40% of FA is FA. 40% of a £100 item however.

And if I could find a true niche

[ratewhore]

I did this a year ago as a poc. Whichever disty I used for my products, you could still buy the same product from amazon or some other such retailer for less than my wholesale price.

The truth is, unless you are in some niche area, a one man band simply does not have the negotiating power with the disties.

C'est la vie...

[Tarquin Farquhar]

1) Depends on a number factors.

2) Knowing how to source, negotiate, sell - all at the right price AND not giving up at the first hurdle.

Negotiate the price down. You can bet your competitors are not paying £42 per item.

No, I don't know how to do it, or I wouldn't be here.

[AtW]

Try this - walk through shareware software boards, look at what software does, what prices they charge - look at those that were downloaded a lot of times, do some basic research: chances are someone got a nice small but profitable niche with some simple software that you can improve considerably to gain market share. At least it will give you ideas related to reality - avoid trying to write software without clear release schedule 2-3 months away.

In fact focus on Iphone - development is relatively cheap, and there is real marketplace with people buying stuff - that's right, forget your hard drives code for Iphone. It's probably one of few remaining markets where one man team can actually play actively.

Other big fields require the man to have combined hearts of 3 lions

[suityou01]

I am know what I am talking about because:

1) I've spent over 5 years developing
2) working on very complex project with a lot of separate very complex tasks
3) no obvious route to earn money

Aye - basically don't try it at home!

But I found a solution

So, the conslusions are (unless you are well funded and can manage 5+ years without revenues)

1) only work on software/service that takes 2-3 months till you launch - improve while you go
2) have a business model from start - research market very well, don't do it after development takes place
3) keep eyes open on other things - contracting in theory is perfect for this sort of stuff as you get time between contract to work on Plan B.

More in my future book with working name "Legends of SKA" - I'll have a big chapter dedicated to CUK

Like I say, well done you. I'm still knackered without an idea. I spent some time googling popular software downloads this evening. Basically they're all anti virus programmes and such like. My original plan B was firewall and IDS based and as I say, I'm two years into that project. An antivirus prog would take just as long to write and the competition is way to far in front.

So as I say, without an idea, it's going nowhere.

[Numpty]

Remember, this is a rolling process, so they constantly have vast (though fluctuating) tranches of cash on hand.

Presumably there are venture capitalists involved with the likes of Amazon who know how to get a return on [ 1 million orders per day x $20 per order x 20 days ] $400m of spare capital.

But it does seem sad all the world's dusty and cosey bookshops and all those bookshop chains get closed down and replaced by one online business which doesn't actually make any money.

If Amazon catches a cold, an entire millennia-old global industry is likely to be destroyed: publishing.

[AtW]

You talk a good talk me old son.

I am know what I am talking about because:

1) I've spent over 5 years developing
2) working on very complex project with a lot of separate very complex tasks
3) no obvious route to earn money

Aye - basically don't try it at home!

But I found a solution

So, the conslusions are (unless you are well funded and can manage 5+ years without revenues)

1) only work on software/service that takes 2-3 months till you launch - improve while you go
2) have a business model from start - research market very well, don't do it after development takes place
3) keep eyes open on other things - contracting in theory is perfect for this sort of stuff as you get time between contract to work on Plan B.

More in my future book with working name "Legends of SKA" - I'll have a big chapter dedicated to CUK

[NickFitz]

even at today's paltry interest rates?

Smart people moving huge sums of money around rapidly can still make money on the markets. It's not as if they leave a billion dollars in a high street deposit account for a fortnight. Remember, this is a rolling process, so they constantly have vast (though fluctuating) tranches of cash on hand.

[MPwannadecentincome]

New Year and I'm thinking about how to make my business more profitable, as we all should.

My chosen course of action is to open an e-commerce web site, selling IT related products. Local focus at first, leaflets in the local rag etc etc. The thinking is that the slow burn of orders will turn over some extra cash, and will open new opportunities to provide IT consultancy.

So, being the IT guru that I am I am already massively down track with the site. Ok so far. And I have even contacted my first wholesale supplier. Keep it simple I thought, focus on blank media. They also do IT kit. Great I think. Send me the wholesale pricelist.

Verbatim external HDD 250GB, £42. Mmmmm. Go to google shopping and low and behold the lowest price is £44.

Down but not yet out. I would have thought there would be more margin than £2 flaming quid. Imagine processing 100 orders in a day and then collapsing in a heap a mere £200 richer.

So, while fully admitting I am a complete numpty and know very little about the retail sector, I have two questions.

1) What is a reasonable margin for shipping something online? 1%, 5%, 10%, 50%?

2) How the heck does anyone make a go of it?

Go gently please.

Good on you for trying.

I too am looking to see how to get some cashola rollin' in.

I've been thinking of something to sell maybe on Amazon or Ebay that has a fairly high margin but is something in demand, a kind of ship and forget type of thing. I've been reading Oliver Goehler's material - not sure what I'm gonna do yet though.

[MPwannadecentincome]

I do know one of the ways Amazon make money from selling goods at cost. (I can't remember the exact numbers of days involved, but these are close enough.)

They get their goods from their suppliers on 30 day payment terms. However, they rotate the stock in their warehouses something like every 15 days. This means that for about 15 days they have the money from the customer, earning interest, before they have to pay it to the supplier.

even at today's paltry interest rates?

[coultog]

Why not read the Long Tail? That should give you some product ideas.