Project Everest

Revenue Stream

[REVENUE STREAM]: FarmEd Timor - July 2019

Lean phase: Cost

 

Aim – This post outlines the fixed and variable costs for the (i) FarmEd application and (ii) Soil Sensors.

 

The business is currently still developing the application and buys ready-made soil sensors to sell on to Timorese farmers or other stakeholders.

 

This post will be split into two sections, one describing the costs related to the app and the second regarding the soil sensors.

 

Farmed Application

 

As the application is currently being developed by university students this product is entirely free, in the future however costs are likely to be incurred.

 

Soil Sensors

 

The soil sensors are currently imported from a Chinese manufacturer. As such this is the only cost incurred with this product. This is the main cost associated with the product however, there are also transportation costs involved.

 

Next move:

As the business increases and matures it is inevitable that the firm will incur larger costs regarding the application. These costs will be in the form of employees, application upkeep and research and development. As the application is optimized further it may be necessary to acquire soil sensors that can measure a broader range of variables- as such this will lead to a cost increase.

 

The full transportation cost needs to be detailed for the soil sensors. A proxy price estimation has been done using DHL as the distributor:

Box size: 344*110*354 mm [maximum weight- 10kg]

If shipped from Melbourne to Timor-Leste (Dili) price: $413.05 USD

Each soil sensor weighs roughly 86 grams

Each container can take 116 soil sensors

The total cost [$413.05- logistics and manufacturer price $696} =$1109.05

If 116 soil sensors are imported their price per unit is $9.56 USD

 

Therefore, these should be sold at least at $10USD. Teams should look to analyze the current competition, from anecdotes from Leader Supermarket the July team was told that most soil sensors were sold at around $25USD. 

 

 

To validate the next phase, it is imperative that the current minimum viable product is validated and that the customers see the utility in the present product offering at the given price.



Lean phase: Revenue Stream

 

Aim – This post outlines the current revenue streams for both the (i) FarmEd Application & (ii) Soil Sensors

 

FarmEd Application

 

The current application is still being further optimized however, it has been successfully translated to the local Timorese language, Tetum. 

 

Currently the application is being sold as a subscription model, this is described as follows:

 

The app is downloaded at a price (p) of three (3) US dollars, this initial payment lasts for three months. Following the three months the subscription model is one (1) US dollar per month.

 

The application is cost-free, so technically we are currently profiting from the application. However this profit margin is not sustainable if the business wants to thrive.

 

Soil Sensors

 

The soil sensors are currently imported and are sold as a one-time purchase option of six (6) US dollars. Currently the price that it is being sold is the same as the import cost therefore, no revenue is generated as of yet.




  • Short description of what stage of the business is the project at

 

  • Following this name each item that generates revenue for the business

    • State the amount and how often it is generated (per purchase, daily, monthly, annually, etc.)

    • How is this revenue generated? Explain the process in detail

 

Next moves:

 

Possible revenue streams could be found with stakeholder partnerships where the app is sold on to firms and they act as distributors/middlemen for the firm. These partnerships would see a commission revenue structure adopted, whereby for each sale the distributor would receive a % of the sale.

Leader Supermarket has expressed interest becoming a soil sensor distributor for the firm, this should be pursued in the similar form as the application.

 

edited on 23rd July 2019, 06:07 by Jacqueline Horton

Lucy Preiss 11 months ago

Status label added: Revenue Stream

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Lucy Preiss 11 months ago

Hi Conor, the google doc would be great to see as a spreadsheet so later groups can play around with numbers and see what different pricing scenarios look like, in order to develop the second revenue stream further.

Reply 1

Conor Young 11 months ago

I would be happy to accommodate the doc into a spreadsheet, however the formulas that I've been creating are not completely finished as Im unsure of how to structure parts of the cost/revenue/profit functions. I'll be able to do this when I have all the inputs for cost so that a function can be created. I've spoken with Julia about this for reference.
Thanks

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James Balzer 11 months ago

This is really good to see Conor.

I would be curious to see if you how the formulae expressed in the WIP document applies directly to the information that you have with FarmEd thus far, therefore mathematically justifying the price points.

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Conor Young 11 months ago

All of the variables that I have wrote in the equations are explained in the WIP document. When I get further detail about how the cost structure works, Ill attempt to write a cost function but as the month is ending this will likely have to be continued by the next team.
Cheers.

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