Consider example of a small business as below. Consider 3 brothers Jacky , Jilly and Jelly starting a
tea stall but at different places. Every one of the brother thinks he is smart and he opens his own shop
and fix his own price. But raw materials and other things are at a fix price.
Details of their pricing is as below
Jacky Rs. 5 per cup of tea Jilly Rs. 10 per cup of tea Jelly Rs. 20 per cup of tea
If you think mathematics is not your cup of team, I feel you should not do business. (Or be ready to join a gang of few who had accounting scandals and CEO’s are behind bar). Jokes apart. Its not a complex mathematics. Details of raw material costs are as below -
| Serial Number | Material | Costing |
|---|---|---|
| 1 | Sugar | ₹ 36 per Kg |
| 2 | Milk | ₹ 500 per 10 liter |
| 3 | Tea powder | ₹ 300 per 500 grams |
Water is considered at 0 cost. Now do a calculation and comment which of the brothers would be earning maximum profit. Details of number of customers which visit their shops is as below. Do not forget to add additional costs given at end. Number of customers differ as their pricing is different. Details of number of customers is as below -
Jacky 600 customers per day Jilly 200 customers per day Jelly 50 customers per day
There are few costs which are additional costs. Not all business owners consider these costs before starting a business. To check and get a brain teaser try to think for a minute and see if you can figure out few critical costs. I could thing of below 3 additional costs - Heating costs - say its Rs. 50 for 20 liter , Property costs - say Rs. 500 per day (for a seating sufficient enough for 5 customers to sit at a time) and Labor - say Rs. 500 per day for 1 labor Now if you do calculations carefully you would observe lot of things which you might not imagine otherwise.
Happy doing business.