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I don't quite understand the logic here.. the 5.2MM wasn't fixed costs, that was costs of goods sold because they needed to provide the service to earn in incom
by JamisonM 3y ago
I don't quite understand the logic here.. the 5.2MM wasn't fixed costs, that was costs of goods sold because they needed to provide the service to earn in income.
So as far as I can tell they lost 318K, but they don't need to grow gross revenue by very much to close the profitability gap.
- asah 3y agoExactly: if they double total revenue then NET revenue (after driver payouts) only grows to $1.4M Sounds awesome but currently the net revenue was 700k which means they spent ~$1mm on other stuff besides driver payouts. Some of that will grow with the business (e.g. customer service, server hosting costs), some is fixed (e.g. you only need one CEO). If they can grow the revenue without also growing expenses then they'll hit breakeven by ~doubling revenue, maybe more, maybe less. Interestingly, i just checked their prices to JFK and they're about the same as Uber. So if they grow beyond breakeven, then they could undercut Uber's current prices...
- JamisonM 3y agoThey developed a new app and essentially built the business in 2022, I am going to expect that the vast majority of the $1MM is fixed and one-time costs. (Obviously they are amortizing the app cost.. but nonetheless.) But regardless of that if you are launching a new service business and you've got $5MM is sales and you need to hit $8MM in your second full year of operation to become profitable, I'll call that almost profitable!