- This topic has 20 replies, 10 voices, and was last updated 20 years ago by
.
-
Posts
-
If you have been following the posts in this thread:
Then you might be experiencing some doubts about the ISE project. I too have doubts as i know others do.
Does this mean that we should give up on the ISE venture. I do not believe so.
Do I still believe in the ISE project? YES! Very much so.
If you want to know why then read Seans post on page 2 of that thread.
Everything that Sean says about manufacturers is true especially a certain Italian firm that now owns Hotpoint, Creda, Indesit and Ariston – four major brandnames. As everyone knows due to the electronic design of macaroni machines and the deliberate witholding of vital information they are not easy to repair. So what do we do? We play right into their hands by telling the customer to phone the manufacturer and pay the £90 to get it mended. We are acctually recomending the people who are trying to put us out of business. Now that strikes me as a bit stupid but we do it to get ourselves out of a predicament.
Due to this sort of thing and other factors the independant repair sector is destined to steadily decline IMO. At the moment there are still enough older repairable machines around like HPT WM or even WMA’s to keep us afloat but what happens when most of these are on the tip and we are left with lots and lots of Mr Macaroni’s machines in their place, and other machines that are becoming increasingly more difficult to repair at a price that is acceptable to our customers.
So it is VITAL that ISE succeeds. If it goes under then our only chance of breaking free has gone – probably for good. This is why it needs to be done properly with the right motives, under the microscope with no hidden agenda’s. I believe if it is, then it can succeed to such a degree that we cannot imagine and revolutionise the white goods industry given time, bringing prosperity to the Independant sector.
At the moment we are all engrossed with what we can get out of it. As soon as £50 to £60 callout fees are mentioned the cash registers begin to hum in our heads and our eyes light up with £ signs. When the figures are examined however in the cold light of day this is a huge misconception.
Based on the figures presented in the aformentioned thread we can draw some conclusions on the anticipated income that will be generated by the sale of one ISE machine under the 5 + 5 package.These are 4{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} breakdown rate in the first 12 months. And one breakdown per machine in years 2 to 5.
Every 100 machines sold will generate 4 callouts @ £50 = £200 this equates to £2 per machine for the 12 month warranty.
For years 2 to 5 each machine will generate one callout @ £60
Each machine sold will therefore provide on average £62 income over the five year life of the machine. or £12.40 / annum less expenses.
Hardly the lucrative venture that we all envisioned! How many machine with live guarantees would you need to make a living out of this. But I am sure that many of you will already have punched these figures into your calculator and reached the same conclusion. The only real incentive to sell an ISE is the initial £80 profit on the sale.
This is assuming however, that the figures the warranties are based on reflect reality. If they do not reflect reality then it will be more profitable for the repairer but the ISE project will fail due to insufficient funding of the warranty and the scenario which will ensue as elaborated on in the thread.
If this assesment is accurate then the whole concept needs to be seriously re-examined as failure will do nothing but hurt everyone involved including you guys that set this up. It will also damage any respect and credibility that this web site has gained in the eyes of the white goods sector.
IMO unless the five year warranty issue can be resolved, ISE’s best chance for success is with the 1 + 5 package. Under this the parts are warrantied for five years which removes a major concern for the customer that an expensive part will need replacing. It also puts the cost of labour back into the hands of the seller / repairer who will cost the job to suit himself and to keep the customer happy as in normal work. As the seller you are also assured that any repair work will come back to you.
The only risk in this is that the machine will breakdown more than is considered acceptable to the customer during years 2 to 5 but at worst the engineer loses face for giving bad advice. A bit of grovelling and lowering the labour cost a little should be enough to retain the customer, at least it will be under your control. This is a vastly different scenario to telling them that the warranty on the machine is worthless should ISE Ltd become insolvent.
The major obstacle is in selling the 1 + 5 package. At £389 it is too expensive to compete effectivly but maybe there is room for manouver here given the importance of making ISE succeed.
Before you all jump down my throat with objections I ask you to have another read of Seans post and consider your own motives in the light of what he says. Yes we all want to make money etc but maybe there is something more important at stake here than our own agenda’s …..
Andy 😀
Re: Do I believe in ISE?
While I applaud your post for its passion I’m afraid you are incorrect about how we work out the finances of ISE.
However your basic point that you think ISE will fall flat on its face because of the 5+5 deal comes across strongly.
I am amazed you are thinking of the demise of ISE due to insolvency, this project is 3 weeks into its trading life, we have registered 100 sales+, we now have a single seller in double figures, another on 6 appliances bought.
As a director of ISE I have no hidden agenda, I, along with my other 3 directors started this because we worked out long ago we were recommending our customers to the opposition, who consistently delivered poor service.
We at ISE have a goal, a company goal, which we are working toward acheiving…
“To create the best independent whitegoods brand, which is underpinned by sustainable profitability”We aim to sell over 5000 appliances in the 1st 12 months, with continuing developement of the appliance and the network to acheive our goal.
Our figures are based on reality and are sound, time will reveal the outcome.
Sustained profitability, sounds good, time will prove our business plan and our calculations.
KevinRe: Do I believe in ISE?
Andy,
I’m not trying to be difficult here but your figures are wrong. They are based on false assumptions and incorrect math.
4-5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} in warranty failure, not too far off the mark probably. But that’s only in warranty.
That can rise to 10{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} OOG to 5 years depending on many factors. Still higher beyond the 5 year mark.
But let’s look at the initial 4{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} you use.
If you sell 100 washers a year (for simple figures) that equates to four repairs a year. Add the years up and by year five you’re doing 20 calls per anum across the board acrued because as your customer base grows so do the number of repairs required.
By my math that works out to an income per anum of £1160 excl VAT in year 5 from repairs. I admit that’s not exactly going to set the world alight, but it’s going on for £100 a month, not the £12.40 you came up with.
Now just from that, which I did in two minutes with virtually no thought at all, do you trust that I can use a calculator? 😉
But that’s not the end of it, at ~£400-500 I should hope that beyond 5 years, where the appliance is most likely to fail, that the customer is more encouraged to have a repair done. This is the period where most of us make a living and where, up till now, to replace rather than repair was an attractive alternative except on premium products.
This is why I say that you can get out what you put in and also I’m trying to explain figures that are pretty complex as this is not a simple equation to work out and can only be done from an informed point of view using statistics from hundreds or thousands of sales and service requests.
It took me years to understand this and a LOT of information.
You mention “five year warranty issue”, what issue as I don’t see any? What I see is an opportunity to build a more stable business based on trusted and proven models.
I, nor anyone else, ever said this was a quick fix. It was never intended to be, it was intended to offer long-term stability.
K.
Re: Do I believe in ISE?
Ok guys we need a maths lesson because you`re both doing completely different sums , don`t ask me to explain it but both equations are fundamentally different and you`re both right.
Andy`s sold 100 machines today, Ken`s sold 500 over 5 year period 😕Bryan
Re: Do I believe in ISE?
kheath wrote:As a director of ISE I have no hidden agenda, I, along with my other 3 directors started this because we worked out long ago we were recommending our customers to the opposition, who consistently delivered poor service.
Kevin my remark about agenda’s was not aimed in any way at the directors of ISE Ltd. If it seemed that way I apologise. I just meant it generally from the point of view that every individual has a personal reason for getting involved.
With regard to my calculations i have only used the figures quoted by yourselves in the other thread. I take Kens point about the income accruing as more machines are sold this goes without saying, but this applies up to the fifth year only. After this any machines that are sold simply replace the warranties from the first year that have expired assuming the rate of 100 / year remains the same. Because of this income would peak at year six and remain the same unless more machines are sold per year ie. Using the example of 100 a year I would only ever have 500 machines actually under warranty that yield income.
Yes hopefully the customer will retain the machine after year five but this has nothing to do with warranty income it would equally apply to any machine sold as long as the customer was happy with the machine.
Can I as a sole trader / man with a van ever hope to sell machines in these sort of quantities?
Anyway I have said my piece and made my point so I am going to shut up now and see how this pans out.
Andy 😀
PS. I do appreciate the fact that you guys have been willing to allow an open and frank discussion on this, given the investment in time, effort and expense that you have put into this project.
Andy worked the figure out based on 100 in warranty sales and projecyed them to five years, or at least that was the only reasonable way I could see he got those figures.
Even on 100 over 5, take the 4{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} PA then add variation for age, useage and anticipated failures over the period based on history from factory/brand. So that rate should rise slightly on 2-3 then tail off until about 5 then start to rise again based on most failure figures.
Sorry guys, but you just can’t pluck numbers out the air for this sort of stuff, you have to sit down and work it all out with all the relevant information.
K.
Re: Do I believe in ISE?
i have always found simple maths works , complicate it with loads of probailities and percentages based on past performance just makes it harder to explain and comes across as a white wash imo.
Re: Do I believe in ISE?
Heh Andy you’ve managed the first couple of threads where I’ve been too slow typing a reply before someone has beat me to it, that’s a first in absolutely ages! 😀
TBH it’s great, we all learn, have a bit of fun and hopefully make some cash.
Sole traders, yes I’d say that they can make some money out this as much of what we’ve done and how we’ve done it was specifically for that. I would doubt it’d ever replace everything you do, unless we achieve world domination in the near future, but it’s a start and at least it’s worth working for I feel. It’s also about not giving away your customers to some faceless corporation that couldn’t give a rat’s a** about you or I.
Who knows though, perhaps with a few more products and a year or so under our belt… 😉
K.
Re: Do I believe in ISE?
Nobody’s remembered that you can stick £80 in your pocket just from delivering a big white box. Just selling the damn thing offers a reasonable reward before any of them start going wrong.
Chris.
Re: Do I believe in ISE?
andy2 wrote: The only real incentive to sell an ISE is the initial £80 profit on the sale.
Tis True Chris
Re: Do I believe in ISE?
taking delivery of my third machine tomorrow,delivering it tomorrow night.thats an extra £240 inthe past 2 weeks 😀 (luvlly jubbly 😀 )
Re: Do I believe in ISE?
andy2 wrote:
Yes hopefully the customer will retain the machine after year five but this has nothing to do with warranty income it would equally apply to any machine sold as long as the customer was happy with the machine.
Don’t underestimate the power of paying customers to keep a repair business afloat 🙂
I managed for 22 years making my living out of 100{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} chargeable repairs (mostly on Hoover washing machines). In the good old days, customers bought a washing machine, and didn’t want to replace it for at least 10 – 15 years. When they called me out with a fault, the last thing on their mind was replacing their washing machine (unlike these days). They were helped along with this desire by spare parts at a reasonable price and a good, friendly and reliable repair service offered by me, who had a good access to spares, tech bullitens and tech support (albeit through Hoover’s technical manuals).
One of the things that most excites me about the ISE project, is the desire by K and the UKWG team to bring back these days, when customers could happily keep repairing their washing machine (within reason) for many years instead of having to buy a new one as is often the case these days. The prospect of selling a washing machine, making £80 + £50 to install and deliver, + £50 if it goes wrong + potentially 10 years servicing is something I thought had gone forever. When you take into account the unprecedented tech support that will be available, this is one hell of an opportunity.
PS. I do appreciate the fact that you guys have been willing to allow an open and frank discussion on this, given the investment in time, effort and expense that you have put into this project.
Me too, and actually I appreciate your posts more than you might think. As someone involved so far only on the perifery, but excited and fully behind ISE, I appreciate the opportunity for the project to be prodded, poked and even kicked to see how it stands up. Although I imagine it is not pleasant for the UKWG team, I believe if something is solid enough you can‘t damage it with a few kicks. It may be painful to watch, but ultimately, if you are voicing doubts shared by many more (silent – lurkers) it will benefit all to have them examined.
Re: Do I believe in ISE?
Since the figures in my earlier post were challenged i have represented them to show the income over a five year period for 500 as Ken presented his.
Based on the figures presented in the aformentioned thread we can draw some conclusions on the anticipated income that will be generated by the sale of 500 machines over a five year period (approx 2 machines a week for 260 weeks).
The figures quoted for breakdown rates were 4 in 100 during the initial 12 month warranty and once during years 2 to 5.
During year 1 every 100 machines sold will generate 4 callouts @ £50 = £200
For years 2 to 5 each machine will generate one callout @ £60 or £6000 for our 100 machines
Our 100 machines will therefore generate £6200 over the five year period
Our annual income will therefore be £6200 divided by 5 to give us £1240 / annum (if you divide this by 100 you will arrive at my original figure of £12.40 for each machine per annum)
If we continue to sell at our rate of 100 per annum by year five we have sold 500 machines. Our income will therefore grow up to year six.
At year six our income will peak at £6200 per annum and will remain at this level indefinately assuming we continue to sell 100 per annum. The reason for this being, that in year six the first year warranties have expired and thus no longer produce income.To sustain this annual income of £6200 (£119 / week) we have to continue to maintain a pool of 500 machines by selling 100 machines per year.
These figures are simplified slightly due to the fact that we do not sell all our machines in one go during each year (the income is actually a bit less than presented). But once the pool is stablised income can only be increased by selling more machines per year.
I had better add into the equation the sale of the machine (otherwise Chris might tell me off) we have 500 X 80 /5 = 8,000 giving a total of £14,200 / annum. This looks a lot better but my original post was only concerned with the income generated from the warranties. Don’t forget too that these figures don’t allow for VAT adjustments.
Andy 😀
PS. Sorry for breaking my vow of silence
Re: Do I believe in ISE?
Andy,
as you are trying to predict turnover for your business surely you can only rely on the actual turnover from the sale.
ie 500 x your selling price =£xxxxxx
out of this you deduct your purchase costs to produce gross profit, from which you then deduct operating costs including wages to leave nett profit, which in turn you then pay tax on.
Whether these sales generate you repair income depends on the reliability of the appliance, and therefore extremely difficult for you to project onto a P&L.
Kevin
- You must be logged in to reply to this topic.