Arson - AKA uninformed business case for new sail design

Discussion in 'Laser Class Politics' started by knot_moving, Oct 31, 2007.

  1. knot_moving

    knot_moving Member

    Likes Received:
    0
    Trophy Points:
    16
    OK so if there is ever going to be a real change in the sail design it seems like there has to be a compelling business case that Vanguard, North (I am in Florida after all) and ILCA will make as much or more money than they do now off of laser sails.

    So this spreadsheet shows my assumptions and seems to indicate that with those WAGs -- I mean well researched assumptions -- the business case seems reasonable. We could have a much improved sail for about $1000.

    Of course it means the price of a new boat goes up by ~$400 and I didn't figure that into how many fewer boats Vanguard sells.
     

    Attached Files:

  2. sailchris

    sailchris Member

    Likes Received:
    0
    Trophy Points:
    16
    The problem I see with your proposal is that it saves the top 220 sailors money, but costs the rest of us money.

    I think a case should be made that the ILCA should make no money from sails.
     
  3. Deimos

    Deimos Member

    Likes Received:
    12
    Trophy Points:
    18
    Why would one of the new sails last a "rockstar" 4 times as long but "us shmucks" only twice as long. As "us shmucks" fussier and need a newer sail ?

    Ian
     
  4. Deimos

    Deimos Member

    Likes Received:
    12
    Trophy Points:
    18
    One think always strikes me as strange with modern business practice - why are margins always worked out in percentages. I would have thought the margin a company makes should also reflect the amount of work and value they are adding to a product. True where stock is being held there is a financing capital element but it depends on how fast the stock is moving and how predictable it is. for e.g. the builder knows pretty accurately how many boats they might expect to sell each month and thus need hold only low stocks (i.e. they can get closer to just in time supply) - thus making the financing aspect minimal (particularly when the probably negotiate extended credit terms with suppliers.

    Whilst I appreciate that, for a more expensive product the supply chain would like to make the same percentage and thus a higher amount of money but, with a minimal financing/capital element why. What are they doing to justify the increased amount of money. I think in part it is the cause of the way economists and financial people look at business. They ignore the practical aspects about what a company is actually doing and just look at percentages - which means end up paying more where the supply chain is doing no extra work or adding any extra value.

    For example, if somebody paints my house there is a materials cost and a labour cost (which includes their profit). If I ask them to use "el cheapo" paint, they do not reduce their labour charges. Similarly, if I ask them to use top of the range stuff their labour stays the same (because it is the same amount of work they are doing which is worth the same irrespective of the cost of the materials).

    (I appreciate that in the example, the newer more expensive sail is at a slightly lower margin - but only slightly lower).

    Ian
     
  5. knot_moving

    knot_moving Member

    Likes Received:
    0
    Trophy Points:
    16
    Granted - I just made up the numbers in the various categories of sailors and and numbers of new sails they would buy. If people can provide more fidelity to those numbers then the business case would get clearer.

    My proposition is that if a business can't be made then there won't be an improved sail design.

    My use of the word "margin" is probably improper. What I was trying to do was identify the total amount of money that went towards the care and feeding of the whole supply chain - in other words, North sails, Vanguard, ILCA, the dealers, and anyone else getting a cut. Any new sail design will have to provide the same of more money in this pot.
     
  6. Deimos

    Deimos Member

    Likes Received:
    12
    Trophy Points:
    18
    I think that, given the way business measures its profit margin these days (i.e. as a percentage) then a more expensive sail (manufacturing cost) will require a larger amount of profit - because the "supply chain" would be expecting the same percentage which would be more actual money. an effect of the way economists measure profitability and in no way reflects the work people are doing or the service they are providing.

    Ian
     
  7. powergroove

    powergroove Member

    Likes Received:
    1
    Trophy Points:
    16

    really? Does the Class make money off each sail? What kind of absurd business practice is that...and if so, why do I still have to pay $40? Where is ALL of that money going? does it help me locally? will I benefit from it at my level of racing and competition(weekender, mid fleet, doesnt really care about winning, like the whole regatta concept, not just the race and the objectove of winning every race).
    dont get me wrong, I try to do my best, but Im not in it for the money or the glory, so really what does my money go for?
    I pay to race, my club covers the regatta insurance, Im not looking for a coach or a sponsor, our club furnishes all the racing equipment, so Im wondering if I should pony up again this year...and BTW, why cant it be yearly dues, not based on the calendar year( I just paid in Septemeber/October and my dues are due again)
    Someone in the know give me a compelling argument, thanks
     
  8. torrid

    torrid Just sailing

    Likes Received:
    55
    Trophy Points:
    48
    OK, I'm going to ask a really dumb question. Why do we need to go to a $1000 sail?
     
  9. knot_moving

    knot_moving Member

    Likes Received:
    0
    Trophy Points:
    16
    So I was really hoping this thread would get people to chime in with different (and hopefully better) information on the number of sailors in the classes I assigned them to, and better info on the number of sails they buy.

    The short answer to your question is that as many have stated in earlier threads, most of the cost of the sail is to support the network of dealers. Therefore if we change the durability of the sails then we will need to keep the same level of support for the dealers that the current system provides, so that will cause the price of a sail to go up by more than the cost of materials.

    The $900+ number that I came up with is highly dependent on the guesses I made and is highly suspect!
     
  10. Deimos

    Deimos Member

    Likes Received:
    12
    Trophy Points:
    18
    Surely, as with any service, if people provide a service people want they they will pay for it. The "distribution network" (retail dealers/chandlers) provide a service and nobody would expect that for free. When you buy anything from a retail shop (with premises, sales people, etc.) you know you could get it cheaper "on the internet" but that does not suit your requirements.

    The dealer network is not a charity deserving of our support but people providing a service for a realistic price that people are prepared for. Somebody who cuts people's lawn and charges $1000 per hour would not get much work as whilst people would like their grass cut they are not prepared to pay his price - they use somebody who charges less. Same applies to dealer networks. They must charge what people are prepared to pay or go out of business. There are enough different companies selling this stuff to allow a true competitive market place so, assuming no "private agreements" retailers can discount, undercut others, etc. so you can chose to buy elsewhere at a better price sacrificing some of the service and convenience. Thus, (in the US) the dealer margins are what people are prepared to pay - by virtue of the fact that they are paying. Of course, if everybody is selling at full RRP then, with that many outlets and business models one would begin to suspect price fixing.

    Unfortunately, the same competitive model does not apply in the UK - no real competition for business (very few retailers of Laser sails) thus you pay what is asked as you cannot get it cheaper or more conveniently elsewhere.

    My thoughts anyway.
    Ian
     
  11. knot_moving

    knot_moving Member

    Likes Received:
    0
    Trophy Points:
    16
    While in theory there is competition among providers of laser parts and sails, I only seem to see that borne out in the price of full-up new boats. Sails seem to be priced within a very narrow band all over the country.
     
  12. glasky

    glasky Member

    Likes Received:
    0
    Trophy Points:
    16
    Market forces still apply

    Some clubs in OZ are bulk buying Intensity sails yo get a great price for for members and permitting their use in club events.

    Cost way is less than a secondhand class legal sail so juniors are encouraged and other members can keep theirs for association events -
     

Share This Page