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Assignment 4: Quoting

Determining the value of your efforts is an essential skill regardless of how you plan to earn your living. If you plan to sell your work, arriving at a fair, competitive, and profitable price requires careful consideration of many factors. For this project you will quote a price for a significant piece you have already designed and built assuming two hypothetical models: direct to the end user, and wholesale to a retailer.

Some conditions:

• you are not quoting for R&D, only the cost to produce and deliver the product.
• assume a nominal overhead of $600/month for rent and utilities (shops, studios, labs). Factor into your overhead any additional monthly business expenses you incur (supplies, services, etc)
• consider all of the factors it takes to get the product in the hands of your customers
• Assume that you are operating a business and that there are costs associated with any goods or services you derive value from (nothing is free). Wherever possible, figure out a monetary value for those costs.
• assume your direct sale customer is in Boston, MA and is ordering one unit
• assume your wholesale customer is in Manhattan, NY and is ordering 5 units
• determine a schedule / terms for delivery and payment

Some characteristics of wholesale vs. direct to customer models:

marketing goods direct to end user

• inventory – management of unsold product, use of space, cash tied up in product
• customer acquisition / promotion of product – effort involved with getting customers
• fulfillment – getting product to customers
• customer service – making sure the customer is satisfied, issues after product is sold
• retailers are  “middle men”, so of course they charge more for the product than they paid for it. If a producer skips the middle man, there is an opportunity for higher profit margins.

wholesaling / serial production

• potential for savings on bulk material purchases
• more value derived from production set-up time / ability to work an “assembly line”
• increased revenue
• lower profit margins – dealing with “middle men”

Approach
Begin by reading the attached excerpt for guidelines on how to arrive at a price.
For each sales model, create a spreadsheet that itemizes every factor that contributes to your quote. Include at least the following information:

• value of your time per hour
• cost of raw materials
• cost of services
• cost of supplies
• cost of delivery
• operational expenses (overhead)
• profit margin

From there, prepare a professional quality quotation document that includes at least the following information:

• your contact information
• client’s contact information (create a tasteful, generic, dummy persona)
• date
• indication that the document is a quote
• price
• description of goods quoted
• quantity of goods quoted
• payment schedule and terms
• delivery schedule

Deliverables:

• 2 spreadsheets, itemizing all factors that contribute to your quotations. Make a spreadsheet with a “sheet” for each client model. You are encouraged to use Google Doc’s spreadsheet application, but any spreadsheet application is fine (excel, etc). Name this file FirstnameLastname_QuoteSpreadsheet.?
• 2 professional quality quotation documents suitable for presentation to a client. Make a single PDF that contains both quotes on seperate pages as well as a photo of your piece on a seperate page. Name this file FirstnameLastname_Quote.PDF
• Create a new post with these documents attached or linked. Be sure to mark your post with the Assignment 4 Category.