How to look at a product?

Nowadays, most of the people want to start something on their own be it a company or a small business. But many of them have similar ideas like, developing an app or starting a service. That isn’t wrong anyway, but there are many other things which would help in making huge earnings. One has to just change their point of view!

Remember one thing, a product based business would help one to earn more than a service based one. The service based business involves many business from small scale (a kiraana shop) to large scale (Infosys and uber like multinational company). The only thing that differs is how large your service is. Let’s not go deep into that. I have two examples to discuss on “how to look at a product?“.

First one, the dolls! We see many people selling Teddy bear dolls in the markets, which cost a minimum amount of ₹500. Now let’s look at it from the manufacturer point of view. The dolls are filled with cotton or even waste cloth cuttings which costs very less. That waste material/cotton worth ₹20 would fill the doll. Now comes the exterior cloth, which costs ₹300/kg. In a kg of that cloth one can make at least 3 dolls each of height 3 feet. Consider ₹50 extra expenses per doll, which would involve stitchings and the design. Hence, a 3 feet doll would cost a manufacturer around ₹150 to ₹200 (these calculations are made considering retail values, wholesale price would reduce the manufacturing cost to much lesser value). A 3 feet tall doll would cost at least ₹800 to ₹1000 in market. Hence the profit scale is simply 3 to 4 times the manufacturing cost on each doll sold!! That’s amazing, isn’t it?😅 That’s why not only dolls, but most of the toy manufacturers are so rich!

Second one, a hair trimmer! The cheapest trimmer in the market costs ₹300. Now let’s look at it from the manufacturer point of view. When you open the blades on top of a trimmer, you can find a small motor which rotates when you turn the trimmer on. It’s a DC motor, which costs ₹5 at max!! When the motor rotates, the two blades on top would slide on each other in opposite directions and that would cut the hair. Manufacturing cost for those two blades would cost ₹20 at max! (Exceptional thing is, companies will be having patent rights on the design of those blades). Then comes the upper body of the trimmer, which will be made of fiber. The fiber is converted to hot liquid form and poured in a mould to obtain the shape, which would cost ₹20 at max to manufacture. The last and most important component is battery, a rechargeable battery which would cost ₹50. Hence the whole product would be ready within ₹100! The big brands like Phillips trimmers would cost at least ₹1000. Battery life is what matters in this product and hence Phillips product costs more. But eventually, the profit scale is just 8 to 10 times the manufacturing cost on each trimmer sold!!

Don’t just end up thinking about the above mentioned two examples, look for each thing around you, observe them carefully and you’ll get to know the actual cost of each thing around you. Take a step forward and build your own one.

Well, now one has the product but only sales of that product can make profit and selling anything for a good price is not that easy!! Also remember, people people pay more for a brand than for a particular product. Aim to create a brand, not just to use one!