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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