Download - Send Wine 1
Send Wine
Khalil Thomas Bernard Laurendeau Sherlon Kauffman
Byron Johns Kelly Lindquist Vipul Singh
Profit Margin (50%)
Profit Margin (33%)
Profit Margin (20%)
Advertising on TV (super bowl)
No Advertising on TV / Cheaper Packages
Higher Sendwine's Avg price
Sendwine's price 89 89 89 89 89 106.5
Sendwine's margin 50% 33% 20% 33% 33% 33%Sendwine's cost price 44.5 59.63 71.2 59.63 59.63 71.355
Variable costs Packaging 10 10 10 10 5 10Tax 4.45 4.45 4.45 4.45 4.45 5.325
Retail price wine 30.05 45.18 56.75 45.18 45.18 56.03
Variable Costs/Unit 44.5 59.63 71.2 59.63 54.63 71.355 Fixed costs Salary $9,200,000 $9,200,000 $9,200,000 $9,200,000 $9,200,000 $9,200,000Advertising TV $200,000 $200,000 $200,000 $5,000,000 $0 $200,000Radio $5,200 $5,200 $5,200 $5,200 $5,200 $5,200Newspapers $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Online advertising $18,000 $18,000 $18,000 $18,000 $18,000 $18,000
Total fixed costs $9,436,200 $9,436,200 $9,436,200 $14,236,200 $9,236,200 $9,436,200
Unit Contribution 44.5 29.37 17.8 29.37 34.37 35.145
Break-even ( units ) 212,049.44 321,287.03 530,123.60 484,719.10 268,728.54 268,493.38
Total Revenues $18,872,400 $28,594,545 $47,181,000 $43,140,000 $23,916,840 $28,594,545
Break Even Analysis
1998 20021999 ( considered geometric growth of market )
Online specialty gift market $179,000,000 $1,400,000,000 $500,599,640
Sendwine projected market $8,950,000.00 $70,000,000.00 $25,029,982.02
• $25 million business in 2000 and 5% share of online specialty gift giving market
• Won’t be able to break-even in a year since it has to generate $28 million in revenues with a profit margin of 33% on each bottle of wine.
• Possible to break-even with a more optimistic profit margin of 50% with only $18.9 million in revenues to generate.
• If Sendwine.com gets in high margin business, they will be able to generate high profits and at the same time break even in the near future.
• We consider an attainable 33% profit margin.
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