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Business finance flow in a very simple manner, it starts from the top (gross revenue) to bottom (profit).
Now between that two point, there’s cost, cutting numbers from the revenue until they reach profit.
Equation wise, R – C = P (totally simplified)
So, one would suspect that a significant in reduction in revenue would cause similar reduction in profit.
[0.8 R - C] would be far less than [R-C]
Well, that’s not the case with Subway, in a business move bound to spawn pricing case studies, Subway cut prices for some of their 30 cm (1 foot) sandwiches from 6 dollar to 5 dollar.
Again, you cut your price by 20%, all things being equal, revenue drop by 20%, and since you’re selling the same stuff, cost stays at past level, and there goes your profit.
In turns out that all thing are not equal, it turns out that human psychology plays a huge role in pricing (surprise surprise). Customers LOVE the 5 dollar price, 5 dollar is a round number, not cheap, but round. 5 dollar allows you to stuck out one 5 dollar bill, instead of 2 bill (one 5 dollar and one 1 dollar).
Revenue soars and yet margin stays…
Now, the effect of the 5 dollar is great, and is heavily explored on the article above. The 5 dollar explain why revenue soars.
But it didn’t explain why margin stays, because you’re bound to have margin pressure due to cost.
Now, my guess margin stays because 3 things:
1. Subway’s sandwiches has been grossly overpriced all along, so even when they cut prices by 20%, they have a ton of cushion on their margin
2. Subway has a lot of idle capacity in its stores (labor and machine), whether these capacity is running at 10% or 100%, they cost about the same. So, the increase volume allows Subway to optimize resource capacity at its stores. The additional cost is minimal, and margin stays
3. Significant increase in unit volume allows them to reduce cost of goods from their supplier and lower the per unit cost from fixed cost items (this one is very theoriticall)
Interesting right? A key lesson here, is that maybe this strategy can be applied to industries where they have capacity lying around, and costing them the same whether being used at 10% or 100%. This opens room to increase volume (by cutting prices), optimizing the idle capacity, and thus in the end, maintain margin but with higher
Filed under: Business, Economy, Workplace | Tagged: Business, Pricing strategy, Subway sandwich | Leave a Comment »
Recently i was evaluating a very nice looking visual mining software named Advizor.
The software allows a very visual manipulation of a large data set, it doesn’t provide the deep analysis afforded by SAS data mining tool, or the more automatic approach by SPSS PASW modeler,
but it greatly support business user with some interest in data (like me) to play with the data that i have
Now, the guy who introduce the software was very nice, very nice, he spend time to introduce us to the software, to show what we can do, he even create and test some hypothesis, and you know what? he’s not the guy distributing the software in Indo
He spend all this time explaining something he can’t even sell to us
So, i contact the distributor of the software in Indonesia, ask them for a quote
And they give me quotes ranging from US$ 3,000 to US$ 5,700 for the desktop version of the software (only the software, no maintenance etc)
It was outrageous, it was overpriced to the point where i feel kinda insulted
why do i feel that? the software is sold online by the developer, i can easily check the price on their website, which i have done before hand (the software is price from US$ 500 to US% 1,000 on the website)
I mean, to release such ridiculous price, what were they thinking? that i’m so stupid i won’t check the price? and it’s out there right on the developer website, and they, as the reseller of all people should know.
Man, this really makes me reconsider all the quotes that i’ve seen and to be very careful about future quotes
Filed under: Business, My office | Tagged: Advizor, buyer beware, Data mining software, price mark up, Software price mark up | Leave a Comment »
http://www.youjustgetme.com/?page=home
Your personality tendencies in a nutshell…
You enjoy making plans and commitments but you sometimes don’t follow through. You are curious about many different things and highly value artistic expressions and ingenious thoughts. You are calm and rational even in the toughest of situations. You are typically respectful toward others and dislike confrontation. You show some tendency towards being reserved in most social situations.
Filed under: Uncategorized | Tagged: personality test | Leave a Comment »
Confidence yah,
Well, this is from me, the things that shape my view might be different from yours
Confidence is several things:
1. Is a trait that allow self value without attachments
Why am i valuable? why do i deserve great things in life? why do i deserve to have hopes and dreams? Confidence sums up the right answer to this question.
The question of “what’s my self value” is core, so core, to our being that human spend considerable effort to establish their value.
Unfortunately, some people place the basis of this value on ridiculous things.
“i’m high value because i’m smart”
“i’m high value because i’m good looking”
“i’m high value because i have money”
“i’m high value because i have power and influence”
“i’m high value because i have a boyfriend”
ridiculous things no?
Why ridiculous?
a. these things are not inherent to the self, they can be lost.
b. it puts people on a rat race of comparing one self to the other
Now, what will person with confidence say about the source of his value?
“I’m valuable because i’m me”
(some christian would say, “hey that’s wrong, you should say “i’m valuable because of Jesus” ok, i agree with them, but it doesn’t help those who are not christians)
2. Is a trait that allow hope and dreams to be remembered
All kids wanna grow up to be something big, but then they went to school and meet a whole lot of other humans, some or supportive, some are not.
Each subsequent years (especially adolescence ones) slowly eats their confidence and their dream.
By the time they grow up, many many people don’t even remembered what the child who was them, want from life
To not lose this, one needs confidence “yes, i know my dream, and i’m sticking to my dream, because i believe that i can do this, despite insurmountable circumstances and improbable odds”
3. is a trait that defends hope and dreams
Society exerts peer pressure to its members, the intensity might be different in different communities, but the pressure to conform and follow the group perspective exist.
In rural society this comes in “sudah tradisi”, “hidup udah ada yang atur”, etc
In more urban society this comes in “cool”, “stylish”
It doesn’t mean that this pressure is bad, the pressure is just there, neutral.
A person whose value are in sync with the values of his community “i like to be stylish” would appreciate and feel no pressure from this community, it’s like a fish being placed into water won’t complain about water pressure
but dreams are generally out of sync with any society, chasing dreams are a damn hard thing to do, requires bravery, persistence, self discipline. Any monkey that dares to chase his dream are claiming that he’s better than many, not good.
then in the midst of this pressure to let go and conform, how do you defend your hope and dream?
why, with confidence off course, again “i believe i can do/achieve this, i’m on par with anyone good enough to do/achieve this”
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What is confidence?
Confidence is the sum/ end result of placing my self value on things that are unchangeable
Confidence is then used as a tool to remember and defend hopes and dreams
I hope when i’m done participating in the huge drama called life, i can say “i have no regrets on not doing this or that, i’ve worked my hands on my dreams. Wasn’t perfect, but i leave no stone unturned”
Filed under: Social commentary | Leave a Comment »
There’s a story about a man that wants a really-really nice shoe
so, this guy already had a shoe, a nice one, people say to him “wow, you have a nice shoe”.
really, anyone who meet this guy thinks that his shoe is nice
but you know what, we humans right, we want more, so is this guy
he passed a nice shoe store specializing in really really nice shoes, like, shoes that are custom made to your feet size, you can choose the materials for the external layers, you can choose materials for the interior lining, you can choose the accessories you’re going to put on that shoe, you can choose the design, and the staff give you honest opinion on whether your option would look awesome or norak (there’s no translation of this word in english, it means something like “a ridiciliously bad taste and showing off this bad taste in public view”)
man, those shoes are really really nice
now, he already has his nice shoe,
but since he saw the really really nice shoe, he thought to himself, “wow, i wish i could have those really really nice shoe (ok, writing all these really really nice shoe is quite tiring, so i’m just gonna abbreviate them RRNS for Really Really Nice Shoe)
now he begin to notice people who wear RRNS, and he felt “man, i wish i could have those”,
now it seems everywhere people are wearing RRNS
and you know what, he did the worst thing he can do.
Do you know what the worst thing he can do?
go ahead, make a guess, it’d be fun
–
He look at his nice shoe, and he think they suck
why? because his nice shoe, are not RRNS
he feels bad about himself, i mean, everyone arounds him now seem to be having RRNS,
come one, why is he the only one with only a nice shoe
he thinks about his nice shoe and why they’re not really really nice shoe day and night, day and night
more and more people around him have really really nice shoe
others around him say “but you already have nice shoe”
he nodded but silently says “yeah, you wouldn’t understand, i really want a really really nice shoe.
I know my nice shoe is nice, but now i know about the beaty and comfort of a really really nice shoe, i simply cannot think of my nice shoe as nice anymore”
so he set his heard, “enough to this unjustice, life is not fair, how come i cannot get a really really nice shoe”
so he got ouf of his house, his mind filled about having this really really nice shoe, he move past out his door,
he walk through the sidewalk, people are bustling jostling around him, why can’t they let him be with his thoughts
he walk accross the streets, his mind was so filled he didn’t see a car from his left
shrieeeeekkssss, the car stops in time, barely, barely touching him
angry but relief at the same time, but thoughts filled with his shoe, he keep moving, more people walking the street he’s in why is this street so packed, why can’t just let me be and with my thoughts of my really really nice shoe
oh, those sweet really really nice shoe, if he only have that, he’d be free from his sadness, free from worries
so he continues walking, thinking about his really really nice shoe, thinking about how unfair it is for him not to have a really really nice shoe
yes he has a nice shoe, but can’t God, his family, his friends, gets it? he wants a really really nice shoe,
if only one of them help him out, he’d be free and happy and joyful again,
if only he can leave his nice shoe for a really really nice shoe
then he see someone that has no leg
Filed under: Social commentary | Leave a Comment »
They think all Indonesian are stupid
In a corruption case, the most important object is the flow of money, because corruption is all about the money.
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Flow of money, large amount of money, could be easily proven, one would not stash $550,000 in the mattress for a long time, they would want to bring it to a bank, or any other financial system to allow easy and safe transportation of the money.
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Now, the Police has a missing link on the flow of money, you cannot make evidence based on hearsay, “oh kata si yulianto, dia udah kasih ke B dan S”.
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The police, for the sake of law, as they like to say it themselves, has to find this Yulianto, get the testimony from the horses mouth, get evidence that an exchange of money has taken place, and that the said recipient of the cash has indeed receive the cash, that the exchange is for accused illegal purposed. How else can you prove that so and so had received bribery?
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They’re still unable to find this missing link, and they keep pushing the case like all Indonesian are stupid fucks who cannot discern facts
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So far, the best piece of “evidence” they have is: a money exchange has taken place at a location in Jakarta AND the suspect car is seen in the parking lot during the day of the money exchange. uhhh.. but doesn’t that mean that everybody with a car parked at said location during the day of the money exchange could also be a suspect?
…
that’s their piece of evidence?
Do they think each and every Indonesian is a clinically certified moron?
Even the Wall Street Journal is writing news about this…hey guys, we’re on the business world spotlight, not in the best of light, but you know what, we’ve been right down there on the corruption list for so long, we just don’t care
Filed under: Social commentary | Tagged: Komisi Pemberantasan Korupsi, Cicak VS Buaya, KPK | Leave a Comment »