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Re: Fairy Active Bursts
I think Martin has a good point when he says that simple detergents and rinse aid worked well enough for a lot of years. As long as the machine is working OK and the correct dosage of salt is used.
There is a continual pressure on manufacturers to be producing innovative products in order to compete with other innovative products produced by their rivals.
Whether these products actually perform as advertised is another matter. It is the publics perception of the advertised product that is important. Will they be tempted to go out and buy it.
As these type of products are usually short term and their performance is not very easy to assess anyway because it is mainly subjective. ie. Do I think these glasses are cleaner than with my last product? Manufacturers can get away with this type of approach.
This not to say that there is no room for product improvement but you have got to balance this against the hype that often accompanies products
Andy 😀
Re: Sold The First One
kheath wrote:Also their is a risk factor with the factory, lets say 50{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} of appliances breakdown with a manufacturing design fault, then the factory foot the bill.
Please don’t ask me to elaborate that one either as I’m not going to tell you the real percentage start figure, it’s certainly not 50{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}.Kevin – I meant to ask you about this but forgot. Does this ‘risk factor’ cover the full warranty period or just the first twelve months?
Andy 😀
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?
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?
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?
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?
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.
Re: Sold The First One
Thanks Kevin
The reason i asked was not because i was questioning CDA’s warranty though.
AndyRe: Sold The First One
kheath wrote:Most manufacturers operate within 4{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} for the first 12 months. Kevin
Kevin – could you please clarify what this means.
Are you saying that for every 100 washers produced only 4 break down in the first 12 months?
If so, is the ISE 1st year warranty based on this assumption?
Andy
Re: Sold The First One
Del wrote:I have to admit that it is more than a little puzzling to see members being far quicker to put their faith in existing manufacturers who’s only ambition is to put them out of business. Rather than trust fellow members of their own community who are in the same boat as themselves.
Does sh*t happen ? of course it does, ask people who bought a Homark appliance, or a Rover car, or an extended warranty from Power House.
Sean Delaney
Sean everything that you say in your post is spot on and i think this whole issue is summed up by the above quote. The issue is:
Do the benefits of supporting this project outweigh the potential risk of damage to my business / finances?
Can i have faith in the guys who set this up.
Maybe it might have been better if this whole thing had been presented differently and you had said up front. “Look lads there is an element of risk in this for you, but look at the benefits – we believe its worth the risk”.
Rather than this painful process of dragging out the true situation in the forums.
Re: Sold The First One
kheath wrote:do you have any idea of the intervention rates that apply in year 1 of products life?
We are much smaller in scale but the percentages apply, approx. We also have the advantage of investing the money from the sale of the appliance, 12 months before it might be needed. Whilst we might be smaller we believe the economies of scale will work for us.
Whilst not trying to convince you of anything, we have done our homework and we are pushing ahead with our own 5+5, you still have the option of 1+5 which negates the risk to you somewhat.
Kevin
In answer to your question – no
But as an engineer i do have a reasonable idea of how many times i might get called to an appliance in years 2 to 5 years of its life.
That is a good point Kevin that you will be able to accumulate the fund for twelve months before it may be needed.
Regarding the figures you quoted for D & G. Lets not assume that these figures can be used as a guide for project ISE. The reason being that these figures cover a whole range of makes and price range. Whilst with the ISE machine all your eggs are effectivly in one basket.
If it turns out to be a bad investment then you have problems big time. And lets not forget that these are not Miele or Seimens but Beko produced machines. Not renowned for quality, although i personally have nothing against Beko products.
With regard to your last comment “Whilst not trying to convince you of anything”, then maybe you should be. There are still a lot of unbelievers in ISE that need convincing and (i will say it again) without them on board this thing is never going to work.
I am not trying to sabotage this venture, i have actually commited to the ISE project myself with my hard earned cash and i have confidence that the £449 packagewill sell OK. But i have to admit that this weekends revelations have seriously shaken my confidence.
Andy
PS. I also note that none of the statements that i made have been challenged so we can take them as kosher?
Re: Sold The First One
I think it is probably time to examine what is exactly on the table here.
First of all let me say that i think you guys that put this thing together are taking this too personally. I for one do not doubt your motives, and i dont think anybody else does. Obviously there is some profit in this for yourselves and there is no problem with that, you people have put a lot of time and effort into this. The whole concept is brilliant.
The doubts that members are expressing are valid concerns that needed addressing and these issues will always come to light eventually because people like Jeremy (who i dont believe was being aggresive, just honest and straightforward) are people who think things through. My only problem with Jeremy is that he did not post in the 5 year warranty thread where the issue was originally raised. 😉
Saying there is no risk for the seller of ISE is just not true. It has become obvious that there is risk involved. I have no problems with CDA they are big enough to be able to absorb any shortfall that might occur from the ISE project. If the worst came to the worst they could sell them through their normal outlets. Where i do have serious concerns is in the liability that rests in ISE Ltd.
Do not misread this as lack of trust in you Ken, Kevin etc because it is not that, as i will explain.
I assumed wrongly that years 2 to 5 would be like an extended warranty, (that is a premium is paid to an insurance company (eg. D & G) who then assume liability for any claims against breadown costs). This would have provided security for both the seller and the buyer. It has now transpired that this is not the case.
As in the case of CDA a firm like D & G has the resources to be able to absorb any shortfall from the ISE project if they get their sums wrong and it costs them more than they received in premiums. They can easily claw the loss back by generaly raising premiums slightly if need be.
Because ISE Ltd being a new company does not have these resources it is dependant upon the fund that accumulates by £60 every time a machine is sold (see Kevins post). This allows one £60 labour charge to be paid out of the fund for each machine before the fund goes into the red. The question is: will the average breakdown rate be more than once in the four year period. If it is then ISE Ltd has serious problems. This is the very real risk that each one who sells machines faces.
If ISE Ltd becomes insolvent then every seller who has outstanding 2 to 5 year warranty liabilities wiil have to either tell their customers that they have no labour warranty or stand the cost of doing the repairs for free until the warranty expires. My understanding is that as the seller any failure to honour the warranty could also result in a legal action being brought against you for breach of contract.
So to put it in a nutshell it all rests on how reliable the machine is.
I fervently hope that this project is sucessful and there are no problems, but i think it is only fair and just that the facts are laid out for everyone to examine.
As i said in the other thread
http://www.ukwhitegoods.co.uk/modules.p … highlight=
the sucess of this project depends upon the members getting involved wholeheartedly, confident that they have a degree of security. If this important feel good factor is not present it will be a struggle.
I can see an easy way out of this problem. CDA obviously believe in this project as they are already heavily involved. Why not let CDA assume the liability for the 2 to 5 labour warranty also for a bit bigger slice of the cake and guarantee in writing that the warranty will be honoured. This would make everyone happy and in my opinion guarantee the sucess of the ISE project.
At some time when the project is on a more secure footing financially and accurate data is available re: the breakdown rate then ISE Ltd could assume its original role.
Andy 😀
