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I'm curious in the approximate breakdown of your expenses between other expenses and your own labor. Also, what portion of the former are fixed versus variable
by pasbesoin 15y ago
I'm curious in the approximate breakdown of your expenses between other expenses and your own labor. Also, what portion of the former are fixed versus variable -- incurred "by the planeload", as it were.
I've wondered whether the businesses that can fare better with Groupon tend to be those where labor is a greater part of their expense, and where the business owners -- especially for a small business -- can effectively trade their own labor at lower compensation -- as a hourly rate or absolutely -- in return for the increased business that Groupon generates (which then provides, they must hope, a longer term marketing payoff).
Also, where expenses are variable and there is not a large fixed overhead that must be met, regardless.
Once you introduce staff labor and physical products with hard margins as larger components in the equation, it seems to me that there's less buffer with which to adapt for a mis-calculation of the effects that a Groupon or similar experience will create.
And fixed expenses have to be covered, regardless, leaving thin margins perhaps insufficient.
As you mention, you also have significant additional revenue from add-ons. And your experience, inherently, probably generates a tremendous emotional boost that in turn helps to move those.
I appreciate your detailed description and explanation of how it has worked for you. It provides some good food for thought.
- joeguilmette 15y agoI can assure you, a tandem has an enormous variable cost. It costs the business ~$80 in cash to put the tandem in the air. This does not include fixed costs such as office staff labor, marketing, the lights, building rent, equipment maintenance and purchase costs, etc.