Business Financials
Financial Overview
A rough estimate of the business financials is available here and explanations of the assumptions made are included below.
When generating the financial overview for VitDaily there are many challenges in assessing the true values, core to this is the projection of how quickly customers may be acquired. The core assumption thus is about this rate which has been fixed to the scale of marketing using an approximation of the cost per customer acquisition. This is thus used to calculate the time to break even, a key factor for any startup. Furthermore Expenses such as order fulfillment and cloud services are highly market dependent and are subject to extreme changes. For the logistics a local Dutch provider Huboo was selected and it was assumed each unit would be warehoused by them for 2 months. The cloud services were assumed to be provided by Microsoft Azure in the western EU region with a client base of 10000, this was chosen as it represents the size of the initial run of VitDaily units. Several other values such as the cost of assembly and injection molding were roughly estimated with the Solidworks PDM suite using current market pricing for PP and Polish labor rates. The Programmer salaries and numbers were derived from publicly available averages about startups in the Dutch labor market. Finally the revenue streams were calculated using an average between the various subscription pricing options and publicly available data about per month supplement expenditure. All of these costs were then scaled in order to represent the potential error.
Taking all of this into account the business requires around 3100 subscribers to break even and should do so in 7 months assuming an initial investment of 897290 euros
Revenue Streams
Revenue is generated via subscriptions and commission from supplements sold for our partners via our marketplace. Once all of the variations are combined the average subscriber should yield 33,3€ per month.
Expenses
Expenses come in several forms Monthly fixed, Per customer acquisition, and Startup.
Startup Expenses include the initial marketing push, inhouse servers for company data, and the initial run of units this is then doubled to account for a period without revenue while the platform is finalized. This sums to a one time expense of 27100 euros or a required input of 542000 euros.
Fixed monthly costs come from cloud services, batch production, and hired developers after error margin of 1,3 this represents an expenditure of 59215 euros
Finally the only cost that is directly proportional to a customer a customer acquisition is the Logistics which is a one time cost of 9 euros per acquisition however this is not included in the overall calculations as over the course of a subscription it will not have a large impact.
Pricing
The pricing strategy is fairly straightforward, we combined research about competitors within the supplement space and the broader health enthusiast market. These companies had monthly pricing up to 100 euros and some one time offerings as high as 950 euros. The average entrypoint pricing was 25-30 euros with more premium products in the 35-55 range. Many of the directly competing supplement roll brands charged between 6 and 20 euros per supplement per month with free shipping around the 75 euro per month price point. Furthermore using the supplement consumption data that we aggregated and accompanying expenditure data it is clear that consumers will bear a price from 25 to around 50 euros per month before supplements are factored in accounting for our lower prices thanks to the freedom of choice we provide. Based on this and in combination with our lean startup model we chose a low entry point of 25 euros to be price competitive and a 45 euro premium price point in order to pay for the added cost of chats with nutritionist and greater token accumulation. In addition both tiers incorporate a 15% discoun rate for annual billing, this is advantageous as the most helpful common supplements (vitamin D and Omega-3s) are most helpful in the winter and most people are maximally enthusiastic about health in the first quarter of the year. Therefore through annual billing subscribers will generate more revenue on the whole as there should be less of a subscription slump in the spring and summer.