Introduction
Project Summary
Design Process
Product Design
Market Research
Financial Data
Future Plans
References
Background Research
Site Map

• Costs of Development
  
• Costs of Manufacture
  
• Costs of Distribution
  

Costs of Development

The estimated costs of development of our product include all purchases made for construction of prototypes and prototype testing. The only expenses incurred were the cost of two toggles ($0.60 each for a total of $1.38 including tax) and a curly elastic lace ($4.60) for testing purposes. Other materials used in the prototype construction, such as shock cord, Velcro, metal strips and metal wire were kindly donated to the development group.

Costs of Manufacture
In order to manufacture one set of our product, which consists of two units, one would need 20cm of shock cord (10cm for each unit), 2 toggles (one toggle for each unit), 2 cm of rubber tubing, and 1/44th of a tube of epoxy glue.

Our estimated costs of materials is as follows: shock cord ($0.50/m), toggles ($0.30/toggle), tubing ($2.00/m) and epoxy($7/tube). Each of the prices above are at current market price with the exception of the toggles which have been discounted 50% to reflect a vendor markup. We expect that the bulk purchase of these materials will lead to lower prices.

For price estimates, we made a conservative guess to the amount of materials we would require, in order to account for wastage during production and variations in price. Thus, our price of manufacture assumes that we require 25cm of shock cord, 2 toggles, 3cm of rubber tubing and 1/44th of a tube of epoxy glue.

The total price of manufacture excluding labour (estimated at $0.8125/set [at $6.50/hr]) and packaging (which is estimated at $0.50/set) for our product is thus estimated to be $0.94. With labour and packaging factored in, each set is estimated to cost $2.25.

Costs of Distribution
Our initial plans of business call for a headquarters and main office in the Greater Toronto Area. The area has a population of about 4 million and a child (children age 0-14) population of 611,500. If we assume that we can tap into 1% of that market the first year since this product has relatively low competition, we assume that we can sell 6115 units in Toronto. With nation-wide expansion programs initiating in year two, we hope to achieve a doubling of sales each subsequent year. This is due to the product being appealing to a larger portion of Canada than just children. From surveys conducted, many people (older than 14) were willing to purchase the product for themselves for either the convenience or performance (sports such as running) benefits that our product provides.

We hope to distribute the product initially in the Greater Toronto Area(GTA) with plans for a province-wide expansion in year 2 followed by a progressive nation-wide expansion starting year 3. Product distribution will be done manually (via car transportation). This will cost approximately $72/week in gasoline, driving for 52 weeks a year with $1,200 a year in insurance costs in addition to that. The gasoline is scaled to the amount of products produced by a factor of (Sales/30,000). This is to reflect the varying amount of transportation needed to distribute the products and also estimates the eventual transition to shipping as our primary means of distribution once the operation expands past the GTA.

For a more detail look at our financial plans and projections, please see our Financial documents.

Revenue Statement

Cash Flow Statement