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List of forums -> Questions and answers. Help. -> Calculating production profitability

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Topic created : 26.08.2020, 16:13
ifrietpani
Winner of the Contest for Managers in the nomination Nation's Health Winner of the Leaders Contest in the nomination The Standard of Virtonomics Winner of the Contest for Managers in the nomination Raw Material Base Winner of the Contest for Managers in the nomination "Knowledge is power!" Winner of the Contest for Managers in the nomination Consumer Goods Winner of the Contest for Managers in the nomination The Standard of Virtonomics Three years with Virtonomics
m:
Razor inc.
 
Hi,
 
I am struggling with finding the best place to launch factories and livestock. I am struggling with calculating the financials before I open a factory or animal farm to estimate my prime costs.
 
As I understand I need to take the following categories into account (not taken into account tax and CTIE):
Salary
material costs (including transportation + custom duties)
energy costs
management expenses
general production
Equipment amortization
 
The salary, material costs, energy costs and amortization are clear for me. I am struggling a bit with management expenses and general production
 
For management expenses I understand that it depends on the salary expenses and the salary of the head office, with a minimum of 10% of the salary expenses.
In my current (limited) example of my factories this is always 10% of the salary costs, but I don't see how this could be higher than 10%?
 
Where it gets confusing is the general production expenses. I found that this is based on: city average salary, enterprise size, equipment quantity and enterprise efficiency.
How can I calculate this beforehand? I have some factories both in the Netherlands as well as Belgium, but there is a huge difference between the two countries in terms of general production expenses (in percentage of total costs, so not looking absolute because I can't compare different sizes). What I experience is that Belgium has very high costs (compared to the Netherlands) for general production expenses which impacts my prime costs significantly. This offsets the benefit i'm getting there on import/export tariffs.
 
Any help is much appreciated.
 
Regards,
   

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26.08.2020, 17:58
ChrisTekk
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m:
EcoTech SE
 
My advice: don't take a very academic approach.
Are there supplies you need to buy on the market?  Ensure there is sufficient quantity at your target quality. Take note the price.
 
You are just starting the game? Look for a very simple product to produce. Not in Sweden. Pick a low salary location with employee skill levels 6-8 for production. For sales, check out a retail location (city) with low quality competition (qual.1-5) and high price levels. 
 

26.08.2020, 21:13
ifrietpani
Winner of the Contest for Managers in the nomination Nation's Health Winner of the Leaders Contest in the nomination The Standard of Virtonomics Winner of the Contest for Managers in the nomination Raw Material Base Winner of the Contest for Managers in the nomination "Knowledge is power!" Winner of the Contest for Managers in the nomination Consumer Goods Winner of the Contest for Managers in the nomination The Standard of Virtonomics Three years with Virtonomics
m:
Razor inc.
 
Thanks for your advice Chris!
 
I'll understand your standpoint, but how do I know if I can better buy the product or produce them?
Still need to run the numbers right?
 
Maybe I am overthinking it, but I don't like making investments without having the business case straight 
 

30.08.2020, 20:22

Last time edited : 30.08.2020, 20:26
ChrisTekk
Egypt retail leader Belgium Retail Leader Italy retail leader Shock-worker of Virtonomics Kindergarten's Leader Power Plants Leader Double corporate chevron Science: master
Agriculture: bachelor The tender collider, IV-VI places The tender collider, IV-VI places The tender collider, IV-VI places The tender collider, IV-VI places The tender collider, IV-VI places The tender collider, II-III places The tender collider, II-III places
World Cuisines, VII-XV places World Cuisines, IV-Vi places World Cuisines, IV-Vi places World Cuisines, IV-Vi places World Cuisines, II-III places World Cuisines, II-III places Shagreen, VII-XV places Shagreen, VII-XV places
Shagreen, VII-XV places Shagreen, VII-XV places Shagreen, VII-XV places Shagreen, IV-VI, places Shagreen, IV-VI, places Shagreen, IV-VI, places Shagreen, IV-VI, places Shagreen, IV-VI, places
Shagreen, IV-VI, places Shagreen, II-III places Shagreen, II-III places Shagreen, the winner Platinum sponsor of the Contest for Tycoons Sponsor of the Contest for Tycoons Greece retail leader Brunei retail leader
Tenderman Winner of the Leaders Contest in the nomination Week of perfect Service Freezer Washer Restaurateur Mayor Mayor Mayor
Mayor Mayor Mayor Mayor Mayor Mayor Medicaster Top Technologist
Retail Elite Fitness Tycoon Five years with Virtonomics Latvia retail leader Winner of the Leaders Contest in the nomination The Standard of Virtonomics Winner of the Contest for Managers in the nomination "Knowledge is power!" Winner of the Contest for Managers in the nomination Consumer Goods Winner of the Contest for Managers in the nomination The Standard of Virtonomics
Finland retail leader Governor Spain retail leader United Arab Emirates retail leader Saudi Arabia retail leader Mali retail leader France retail leader World's retail leader
Leader in technologies
m:
EcoTech SE
 
again, rule of thumb:
If the market is highly competitive - should be easy to buy any amount close to cost price. BUY !
If there is no 'efficient' market - you'll have a hard time to find supply at reasonable price. MAKE ?
 
Check and compare the offers available for: fabric, clothes, honey, copper, aluminium, spices, flowers.
https://virtonomics.com/mary/main/globalreport/marketing/by_trade_at_cities#by-offers ...   -> "Products" = wholesale B2B
 
And of course: once you decided to build a plant, you'll check your cost price on the "production" tab.  
 

31.08.2020, 12:12
Wonson
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l:
Wondime
m:
Wondime
 
He obviously knows these things and already knows how to calculate.
However I cannot understand what the question is. Maybe the question is "how should I evaluate the business I planned?"?. There's already a fairly good lecture on the subject:
https://virtonomics.com/mary/forum/forum_new/11/topic/105371/view ...  
Has anyone seen my spear? How can I be a spear carrier without my spear?
 

List of forums -> Questions and answers. Help.-> Calculating production profitability

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