Hope you can see the picture of my new razor.
Yes, I know it looks like a Nespresso Coffee machine – because it is – but stick with this…
Hardly the highlight of my week but an experience just the same. The picture is my Christmas present from my wife & daughter, and very nice it is too. It came complete with 200 coffee pods which sounds a lot, and we (not just I) have enjoyed the coffee so much it is time to buy more.
This is where I discover I have a razor. Where the razor is very cheap but the company – usually Gillette or Wilkinson Sword – makes money on the blades. Kodak did this once with cameras and film, but they did not make that idea last forever. But Nespresso is going very well.
My Nespresso machine is fab, but the coffee is only cheap if you compare it to a takeaway or a coffee shop – between 46p-£1 per cup/mug. It does taste lovely!
To buy more I (naturally) go online via the app, which is where some more marketing comes my way – would I like a subscription? Another special offer – 2 months ‘free’.
So – like you I am sure – I have another subscription. To add to my others.
I pay many of my regular bills and commitments monthly – utilities, phones, rates. Yet look at the other subscriptions:
- Apple Music
- Office 365
- Online Storage (all my selfies)
- Reading – Financial Times, Money Week, Private Eye, Harvard Business Review, Autocar, Bike magazine…
- Entertainment – Netflix, (I got rid of Sky)
- Website
- Email hosting
- Shaving (if I want – Harry’s is available)
- And looking at some parcels that I see, beauty products from Beauty Pie.(What is in those?)
This is not everything you can get on subscription either: meals with Hello Fresh or Gousto, professional memberships….
Two questions for you – I will supply an answer to the first:
- Why subscription? You will be told it is for convenience, certainty of supply, you may even get more product or a lower price. I save £330p.a. on the FT by subscribing. Yet there is another reason – companies like you subscribing because it is certainty of cash flow for them. The prospect of a regular amount coming into their bank account makes their cash flow forecasts much easier to manage. Why Nestle sells Nespresso on subscription – regular cash flow, unlike it competing for space on a supermarket shelf (or website). And in my machine, you have to use their coffee pods.
Q2: how many subscriptions do you have – and how many are you actively using? Only you have the answer to that one.
Regular cash flow is great – as long as you manage it. That means managing what goes out, not just what comes in. A run through your bank account/credit cards statements is required.
If you’re feeling the need to discuss this further, let me know, find a slot in my schedule here, and we can have a coffee.
Well, I can. Would you like to join me?
Buzzword of the Week – Cost of Sales
Definition – Cost of sales (CoS) is the cost of labour and materials directly involved in creating your product or service. These are also known as variable costs or direct costs.
Other costs, such as staff salaries, marketing, or depreciation, should go into the separate operating expenses section of your profit and loss account, as they are fixed costs. (Fixed as in they get paid whether you do more business or not – not fixed as in the cost stays the same!)
Alternate View – For manufacturing, retail, and wholesalers these are critical. The essential thing is the Variability – these costs rise and fall in line with revenue. In theory this is simple: raw materials, direct labour. In practice though – does that include transport, maintenance, depreciation which rises with machine use… where do you draw the line? Many businesses – especially services, airlines, and technology – are fixed costs based. Control of the fixed cost is what makes the most difference in cost management.
Coming Up…
CIPD HR Hot Topics is on Friday February 11th an informal free flowing discussion about what’s hot in HR right now. This week it is discussing how employers can help employee wellbeing and financial well-being. Free to join https://www.eventbrite.co.uk/e/online-cipd-cov-warks-hr-hot-topics-networking-meeting-tickets-251979315917?aff=ebdsoporgprofile
Pitching for Finance – a free workshop from Business Ready, which I am running Monday 28th 1pm – 4pm. Come prepared to Pitch! Sign up at https://business-ready.co.uk/event/pitching-for-finance-webinar-2/
Finance Tools for New Businesses – I shall be running a free webinar with BIPC Worcestershire on Friday 25th February at 11am – https://www.eventbrite.co.uk/e/key-finance-tools-for-new-businesses-registration-214496042437?aff=ebdsoporgprofile