Send Wine

Khalil Thomas Bernard Laurendeau Sherlon Kauffman

Byron Johns Kelly Lindquist Vipul Singh

Break Even Analysis
No
Advertising Advertising
Profit Profit Profit on TV on TV / Higher
Margin Margin Margin (super Cheaper Sendwine's
Sendwine's   (50%) (33%) (20%) bowl) Packages Avg price
price
Sendwine's 89 89 89 89 89 106.5
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 10
Tax 4.45 4.45 4.45 4.45 4.45 5.325
Retail price wine
Variable 30.05 45.18 56.75 45.18 45.18 56.03
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 $9,200,000
Advertising            
TV $200,000 $200,000 $200,000 $5,000,000 $0 $200,000
Radio $5,200 $5,200 $5,200 $5,200 $5,200 $5,200
Newspapers
Online $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
advertising $18,000 $18,000 $18,000 $18,000 $18,000 $18,000
Total
Unit fixed costs $9,436,200 $9,436,200 $9,436,200 $14,236,200 $9,236,200 $9,436,200
Contribution
Break-even 44.5 29.37 17.8 29.37 34.37 35.145
( units ) 212,049.44 321,287.03 530,123.60 484,719.10 268,728.54 268,493.38
 Total  $18,872,40          
Revenues 0 $28,594,545 $47,181,000 $43,140,000 $23,916,840 $28,594,545
 1999 ( considered
geometric growth of
1998 2002 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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