Early Costs Estimates

In class Monday we had an advising session with Mark. We had a good chat and Mark bought up some things we hadn’t thought about, mostly money related. After our meeting with Mark we had a team meeting and tried to work out the start-up cost estimates. We had to guess some of the figures but tried to base them off realistic/similar figures, for instance we estimated we could start with 50 users, based off our survey results.

Set monthly costs:

office/storage/ DC space : ~ $500 (we googled, and found a few spaces we thought would work and averaged out the price)

accountant : ~ $175 (a suggestion from Mark, found the average cost for an accountant in a similar business)

Monthly income from 50 users:

In our survey we asked how much they spend on clothing per month, from these results we’ve concluded that we would have 23 customers on level 1, 18 on level 2 and 9 on Level 3.

With 23 customers on L1 we’d make $920/month

18 customers on L2 we’d make $ 1260/month

9 customers on L3 we’d make $900/month

Which totals up to $3080 a month from subscription fees.

Monthly upkeep costs:

Using the same system above we worked out approximately how many garments we’d be renting a month. On level 1 we estimate you could rent ~2 items, level 2 you could rent ~3 items and on level 3 you rent ~ 4 items (give or take.) This means that we’d be renting out roughly 136 items of clothing a month. This brings us to the monthly upkeep costs.

Laundering cost: $408/month (based off of Amelia’s experience of working at a suit hire store.)

Courier bags: $45/month (based off of 150 parcels sent a month and bags being 0.30c each.)

Shipping: $952 (a rough estimate, based off Kate’s experience working at Augustine who offer free shipping.)

Printing budget: ~$14 (assuming we’d sent out care cards with the garments, printed in bulk.)

Then we worked out our estimated profits:

income ($3 080) – monthly costs ($1 419 + $675) = monthly profits ($986)

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We also worked out if we were renting out approx. 136 items a month, we’d need to stock the site with ~200 items (for the sake of whole, easy to math numbers.) Which then meant that we’d need to spend roughly $15 000 (the type of clothes we’re looking at are roughly $100 +, but the fashion guys think we could get the clothing cheaper direct from the store/wholesale.) to stock the site before we even start. And we factored in an annual $200 hosting fee for the website.