Store Margins and City Averages :: Questions and answers. Help.

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Topic:

Topic created : 3.06.2010, 00:58

DaBatThrower

Hello everyone,
First post!

I'm a new player with a store, bakery, and mill. My bakery is doing very well, and my mill is doing fine. My store has good days and bad days, mainly because of supply!

Based on what I've been reading this is a market that is in low supply right now. My concerns are as follows: my store sells food stuffs and about 40% of the products cannot be bought for less than the city average and are of the same quality. This means that, for it to be worth buying I would need to mark up the cost somewhat and post prices even higher than city average.

I am hesitant to spend large sums of money ordering products for higher than city average considering that I am a small company and will not be able to absorb the losses well. Should I bide my time and wait for the supplier prices to fall or should I go ahead and TRY to sell these goods at well above city average?

Additionally, do city averages change with supplier trends, or are they relatively fixed?

Any help would be great.

Thanks,

DaBat!

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Message list:

3.06.2010, 04:02

Pyrex

ZION Group

Zion Holdings

try to get contracts right after the update. or try checking it during the day to see if something better appears. and when you grow up, start producing your own goods Well

then you'll be ok.

3.06.2010, 05:00. Subject: To fathon

light76212001

You and all players affect the average price and brand. The other price is for local supplies prices are computer operated stores. Which you cant see. Those local suppliers sometimes goes up and down. If the average price and brand is little higher they try to match it. It also depends how much the players sell if they selling more than the local suppliers then most likely local suppliers will local supplier will lower the prices.

If you are in the Mary you can place an order in electronics. I put a priority on small companies. Even though it says zero. BOSCH Warehouse, you can order from there.

3.06.2010, 09:10

Last time edited : 3.06.2010, 09:11

Company 2.0

Try some of the higher priced goods, but keep volumes low until you know how much you can sell and still profit.

Start by ordering 1 or 2 goods and see how that goes. If they sell you can increase prices or order volume. If they do not sell you could try a lower price or forget those products.

Remember to factor tax into your selling price. If the region has a 20% tax rate you'll need to sell with 20% margins to break even.

3.06.2010, 16:07

ccm_tsang

DaBatThrower since your store is selling food stuff, and you have a bakery and mill, i'd say stick with food for a bit til you gather some momentum (or grow up)

there are some player-generated funds/co-op in Mary that sells goods at lower prices. Light's electronics is one, ChrisBerlin another, and VLLord's relief fund helps with raw materials, machines and supplies as well.

look through the forum to find them, and you should find other useful information on the way.

you can always sell your bread and flour, then, as Fractal suggested, buy small vol of other goods and see how it sells.

you can check the price and volume that other players with store in the same city have set with the market report tab or clicking on the picture of your sales item in the tradehall tab.

good luck.

4.06.2010, 05:53

RockWhiter

Thank you Fractal to remind to take acount the tax into the markup! I never though about it actually Oops!

.

I'm a young player too DaBatThrower, same structure as you (mill, bakery, store). My store is not extremely successfull but here is my experience so far:

With the time I abandonned some of the products because I couldn't find any wholesaler. (tried to buy supply at high price to resell it though).

If you have a good seller with a product who is selling well, you can increase the supply of those "tops" products.

If you can't get enough, you can consider buying cheap supply with low quality and expensive supply (ie more than city's average) with high quality to balance your final product. You're going to sell at an average quality but you will have more quantity.

If you really can't get more of a product because of the supply's prices, try to sell it as expensive as possible to make the maximum profit.

4.06.2010, 20:11

DaBatThrower

Thank you everyone for all the help. I've been experimenting the last few turns (cost me some money). It seems like stores require a good deal of babysitting due to the sporadic nature of supply.

I'm going to keep working on it!

5.06.2010, 03:11

Last time edited : 5.06.2010, 03:11

DaBatThrower

Ok, now I've got another question:

Tax rates... in school we learn that corporate taxes are only lobbied on PROFIT. In Virtonomics, are taxes lobbied as sales taxes, that is a flat rate based on income, or is it leveled on profit only?

Example: 20% tax rate...

Let's say I sell bread that I bought for $40 at my store for $100. Do I get taxed 20%*$100 = $20 or do I get taxed
20%*($100-$40) = $12 ?

Just want to make sure I've given myself enough room for tax consideration.

5.06.2010, 06:58

Last time edited : 5.06.2010, 07:17

RockWhiter

That is a good question, so I just went to look!

You have the detail of the calculation of the taxes on your financial report > by articles.

It seems that the taxes are based on profits only: i.e. extract from my financial report:

Calculation of tax payments
Revenues 648 086.00$
Prime cost expenses 352 201.93$
Taxable profit 295 884.07$
Corporation tax (30.00 %) 88 765.22$
Total 88 762.16$ (considering benefits)

The Prime cost expenses seems to be = (number of good1 sold X purchasing price good1)+(number of good2 sold X purchasing price good2)+...

Therefore you don't need to put a 20% margin on your products if the local tax is 20% as is saying Fractal (or am I wrong?)

Question: what represents the difference between the corporation rate, which is 30% of the taxable profit, and the total, which appears on the Graphics page as taxes?

You may want to have a look here http://wiki.virtonomics.com/index.php/Principles:Taxes.
I need to say that everything is not clear for me... Especially you can see:

In certain situations profits tax is not collected. It happens when:
* the player sells his goods below prime cost,
* rate of profit is below the basic profitability (which is conditionally equal to the profits tax rate in the current region)
In these cases excise tax will be collected instead of profits tax.

I understand the first point, but I don't get the 2nd one.

Question: Basic profitability actually means a minimum margin of the % the local tax? For example: product cost $80, I need to sell it $100 minimum if the taxes are of 20% to pay profits tax? How much is the excise tax? (in this case Fractal, you would be right...)

5.06.2010, 11:46

Last time edited : 5.06.2010, 11:53

spring_onions

RockWhiter

Calculation of tax payments
Revenues 648 086.00$
Prime cost expenses 352 201.93$
Taxable profit 295 884.07$
Corporation tax (30.00 %) 88 765.22$
Total 88 762.16$ (considering benefits)

The Prime cost expenses seems to be = (number of good1 sold X purchasing price good1)+(number of good2 sold X purchasing price good2)+...

Therefore you don't need to put a 20% margin on your products if the local tax is 20% as is saying Fractal (or am I wrong?)

Question: what represents the difference between the corporation rate, which is 30% of the taxable profit, and the total, which appears on the Graphics page as taxes?

The tax amount that appears on the Graphics page is the same with the corporation tax on the Article page.

5.06.2010, 12:07

warfreak

Correct, the corporation tax that you pay is the level of tax on that region, so if the region has a tax rate of 35%, the corporation level of tax will be 35% for a store in that region. If another region has a tax rate of 22%, then a store there will have a corporation tax rate of 22%. This will apply not only for stores, but for all subdivisions that are making a profit, be it a factory, farm, warehouse, etc.

Unfortunately, Fractal, you aren't technically right, you don't need a 20% margin on your products if you need to pay tax, tax will be paid after the goods have been sold during the update, and if you register a profit, you will have to pay tax on that profit, which is simply revenue - prime costs and expenses (advertising, salaries,etc). However, it is useful to keep a good margin, in order to make some profit, and make sure that your company can continue to grow.

I am not sure about excise tax though, I don't have any businesses that are in that in the red.

5.06.2010, 17:00

Last time edited : 5.06.2010, 17:01

RockWhiter

Question: what represents the difference between the corporation rate, which is 30% of the taxable profit, and the total, which appears on the Graphics page as taxes?

The tax amount that appears on the Graphics page is the same with the corporation tax on the Article page.

Actually it is not exactly the same: there is a slight difference between the "corporate tax" and the line "total" of the calculation of tax payments (see Financial Report>by articles). I can see that it is a very little difference, but still, I would like to know what it is.

5.06.2010, 19:50

spring_onions

RockWhiter
Question: what represents the difference between the corporation rate, which is 30% of the taxable profit, and the total, which appears on the Graphics page as taxes?

The tax amount that appears on the Graphics page is the same with the corporation tax on the Article page.

Actually it is not exactly the same: there is a slight difference between the "corporate tax" and the line "total" of the calculation of tax payments (see Financial Report>by articles). I can see that it is a very little difference, but still, I would like to know what it is.

Apparently, my income statement doesn't have that "total" line after the corporate tax. Wait, from what subdivision are you taking the financial report? Mine is from a store.
Different subdivisions have slightly different structures of their financial report by article.

5.06.2010, 22:46

Last time edited : 5.06.2010, 22:46

RockWhiter

I took it from a store too (foodstuff) in Birmingham, England It is surprised

6.06.2010, 07:09

spring_onions

That is strange...well anyway, we can't do anything about the taxes so better leave it at that.

7.06.2010, 17:58

DaBatThrower

Ok, I think I'll share this so other people don't make my mistake.

Just has a session where my income from sales was $96k, and my expenses including new product purchases came in at around $90k. Unfortunately when I looked, I saw that I had been taxed $8k which was illogical to me at the time, and made that session unprofitable. I made the mistake of calculating tax on profit as 20%*(96k-90k). That's not correct. The game saves your prime costs and calculates your tax based on what you paid for the good that you just sold. Since I paid around 50k for the goods that were sold, that $8k tax is expected and the new product purchases can almost be seen as an investment that leads to negative cash flow, but decent profitability.

Just thought I'd share.

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List of forums -> Questions and answers. Help. -> Store Margins and City Averages

List of forums -> Questions and answers. Help.-> Store Margins and City Averages