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Subtlewax Case Summary

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After conducting in-depth financial analysis of SubtleWax, we were able to identify and pinpoint all future costs associated with the creation, manufacturing, and selling of our product. When interpreting the data for the cost analysis (Exhibit ), the product cost per unit (12 strips) totals $3.22. This is comprised of 3 sub-costs: $2.12 of direct material, $0.70 of direct labour, and $0.37 of manufacturing overhead. Furthermore, to get a sense of period costs and total product costs, we conducted an industry analysis in order to project revenue. As of 2017, the hair removal market was valued at approximately $880 million. This market is mainly made up of direct competitors that include wax strip products, wax solutions, and wax beans. Due to the amount …show more content…

Factoring in the bullish nature of the industry, we conservatively estimated to reach a 1.25% market share of the hair removal industry, overall accounting for 956,522 units. The period costs associated with this initiative are comprised of multiple sub costs: Promotion expense, R&D costs, rent expense, website related expenses (creation and maintenance), and shipping costs. All in all, this accounts for $516,333 of total costs. Moreover, when broken down into period cost per unit and added to product cost per unit, the total product cost equals $3.76. Due to low brand awareness and lack of customer base, we estimated that 70% of sales will come from intermediaries, and 30% from our online store. This results in a website contribution margin of $8.78 and retailer contribution margin of $4.50 (Exhibit ). Subsequently, a tax rate of 23.96% (Exhibit ) affects our net revenue by a total of $1.15 million, resulting in a net income/profit of $3,324,930.79 (Exhibit ). Additionally, it is determined that 47,957 units ($575,485) need to be sold through retail and 98,380 ($737,844) need to be sold through our website in order to break-even (Exhibit

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