- This topic has 20 replies, 10 voices, and was last updated 20 years ago by
.
-
Posts
-
Re: Do I believe in ISE?
Kevin i think you are missing the point here.
The object of this excercise originally was to calculate how much cash a person could make off ISE in warranty repairs based upon the breakdown figures that you have based the funding of year 2 to 5 warranty repairs on.
I am not in any way trying to predict the turnover of my business from the sale of ISE machines – believe me.
Let me put this bluntly.
Either machines break down frequently and people make lots of money on callouts and ISE Ltd goes bust because you have only provided for one breakdown in the period for which you hold the liability.
OR
Your figures are correct and ISE is far less profitable than everybody imagined when the figure of £60 a callout was first mentioned. Because in reality there will only be ONE (2 to 5) callout in the life of the machine.
You cannot have it both ways these two options are mutually exclusive.
The point of my excercise was to show that ISE is not going to be the cashcow that everybody imagined when £60 a callout was mentioned (if your estimates are correct).
As i have shown apart from the initial sale profit (which is good) ISE can only be profitable to people who can sell large numbers on a regular basis. I know for a fact that little old me can only dream if selling machines in this quantity, in the normal course of my business.
Having said that it is worth making the £80 on the sale alone. If the machine is as reliable as you estimate then the customer will almost certainly keep the machine past the 5 years and so may produce more cash in the pocket.
In the words of a famous actor, “I don’t want to talk about this anymore”
Who is the actor? What is the film?
Andy 😀
Re: Do I believe in ISE?
andy2 wrote:Who is the actor? What is the film?
Jack Nicholson?
The Shining?Re: Do I believe in ISE?
Cant remember that line in the shining martin. The one i was thinking of was Kevin Costner in the bodyguard. After the fight in the kitchen.
LOL
Brilliant!
OK – I am a sad git for watching the bodyguard but my excuse is that i live with three women. Before you all go green with envy i had better tell you that two of them are my daughters.
Re: Do I believe in ISE?
Andy, the point is that we dont’ want them to break too often. By the same token we want them to break.
Tough being a repairer. 😉
What you have to bear in mind and, I think I see how you’re trying to work this out, is that the repair business isn’t linear so you don’t get guarantees generally on workloads. Even talking to large manufacturers they get the volumes wrong quite often. This isn’t their fault and, in part, they’re not actually wrong it’s just that quite often the local demographics and geography can affect how long an appliance runs before it breaks.
Look at it this way, in an area where there’s sand in the water we get calls for squealing pumps on Brand A. Inner city regions you never change a pump, but you get premature bearing failure as the thing’s never off. Extreme examples maybe, but you can see what I’m driving at I hope.
But the manufacturers can’t drill it down like that usually, they have to rely on overall statistics which will cover a little old lady using it once a week at one end of the spectrum, to a family of six hammering hell out it. So you get an overall picture, not a localised one.
Whilst I may not think that that is accurate enough I can see the sense in using the figures like that and that, for financial planning, it’s the only way to do it really.
The same equation will show that the machine in heavy use may fail at 28 months, the one hardly used may go till it’s 8 years old before needing attention. It’s a vast spectrum, so the only way to plan is on averages. Hence the use of all the stats which someone dismissed earlier as rubbish basically, it’s not by a long way.
Trends say that, in general, appliances fail more at paticular points in their lives and if you look at failures graphed out it’s quite interesting that you get a spike when new, installation and misuse generally. Then you tend to see a rise at 2 years, flatline, then a rise at 4-5 years.
Planning figures on repairs of any small number, like 100, is therefore difficult at best with all these variables and they’re just common sense really when you think about it. I mean, what hapens if you sold 75 to high use customers? You’d end up with loads of repairs on those alone and that’d throw your figures way out, on something varying that’s just that simple.
So the premise that the two are mutually exclusive is in part right and in part wrong as either is possible depending on the conditions applied.
The trick is to build the customer base though across the spectrum so you end up with a nice little turnover across the board. Like almost everything else, you’ll see some customers far more often than others, some you may see only once, some you’ll never see and some you’ll want not to see yet again. But that’s the repair business for you.
K.
Re: Do I believe in ISE?
Ok … time for my 2 pence worth how I see it … a machine is generally going to break down “above an average, below an average or about an average amount of times” … Reasonable assumption so far ??
If its above average = poor impresion by customer of company / product …
( not what our thouroughly researched figures show, so I am lead to believe, ISE will demonstrate )If its about average = win / win situation for everybody … customers / engineers / UKW because thats what we have costed everything on … everyone gets to be happy !!
If its below average = ( ideal world scenario ) Engineers get to rec’ a product that works well, is reliable, makes them money at the start … ok, not as many breakdowns as we have “projected” (short sighted view IMO) but hopefully an above average increase in sales through word of mouth / enhanced reputation of the product / exposure will lead to extra sales (more qty of initial profit from the sales per engineer ) … Customer happy as they have a great product that does “what it says on the tin” so more inclined to purchase your services / goods from you again, and again and again for other items in the house that you are able to repair as clearly your knowledge of machines is very good … UKW very happy as we get a great reputation, happy customers, happy engineers to work in conjunction with, profit and an increase in revenue to allow us to develop our range on, and on ! This is the snowball effect … larger range, attract more customers, higher volume to break down & be misused by our customers = more work for you at a decent rate !
Or did I miss something ?
- You must be logged in to reply to this topic.