Ann: Updated Shareholder / Investor Presentation, page-130

Ok Jas, lets make it simple for you.

Little Johnny wants to make some money. He makes a mean apple pie so decides to make and sell apple pies. Each pie needs 2 apples to make (as well as pastry and energy to cook them). As Johnny has no transport he has to buy his apples and pastry at a nearby 7 -11 at $1 per apple giving an COGS of $2 Apples, $1 Pastry and 50c for power = $3.50. He is able to make 10 pies a day and sells them at $5 per pie making a profit of $1.50 per pie i.e. $15.00 per day.

After 10 days Johnny has made $150, his dad looks in the cash box an sees the $150 and reports the to Johnny's mum that Johnny is doing well.

Johnny soon realises that the apple from 7-11 are expensive and now that he has the cash, orders apples from farmers direct to be delivered to him at 10c per apple, however the minimum order for free delivery is $150. Johnny orders the apples, they are delivered and Johnny pays for them with his cash.

Johnny's dad checks the cash box and sees there is no money in the box, he reports to mum that Johnny't doing well as he is not making money.

Johnny keeps selling his pies, now the COGS is 20c Apples, $1 Pastry and 50c for power = $1.70. As he still sells the pies for $5 he is now making $3.30 per pie or $33.00 per day. After 10 days he has $330.00 in his cash box and as apples last well, he will be making that return for a while.

So did you follow that Jasmin? It's pretty simple, decrease your input costs by ordering in bulk then make more profit on each sale.

Go Big or go home......simples..