Financial
Break Even
When the Restaurant Assistant system is put on to the market, the selling price will be $7,500. This can be broken down in to three categories: hardware, software, and installation. The price charged for hardware will be $5,000. The price charged for the RA software, developed in-house, will be $2000. The installation fee will be $2000.00. Of the total revenue per unit sold of $7,500, minus the cost of hardware, the profit earned will be $3,305.
In order to calculate the time required to break even, the cost of personnel and hardware must be divided by the profit amount. Given this calculation, the company must sell 313 units before the break-even point is reached. Given the marketing research (found in the marketing section of this appendix), the company should be able to sell at least 10 units a week, the time required to break even will be approximately 8 months.
The details of the profit and break-even analysis are in the charts and graphs below:
Considering the customers have no existing hardware in their restaurant, they will be charged a fee of $5,000 for hardware, $2,000 for software, and $500 for installation. This brings the total cost to the user to $7,500, subtract the companies cost, and the company makes a profit of $3,305 per unit sold.
In order to calculate the number of units needed to be sold in order to break even, the cost of personnel plus the cost of development is divided by the profit, coming out to 313 units to be sold. If 10 units are sold each week, it will take 8 months to break even.
The majority of the cost to the user comes with the hardware, second is the software developed by the company, and installation is only a very small percentage of the fee.
When the production begins, the company will be in the whole $1,034,465. After 8 months having sold 313 units, the company will break even. Further projections indicate after around 23 months, having sold 1000 units, profits will be $2,270,535.