Friday, December 02, 2011

i seem to be missing something......

Hi everyone

well, this is a well covered story in the traditional press, but i am somewhat taken aback at their coverage of it.

here is a lady called Rachel Brown, who owns a baking company called Need A Cake.

Ms Brown took the somewhat interesting decision to offer her apparently excellent cupcakes at a discount. a, give or take some decimal places, 75% discount, selling a set of 12 cupcakes for £6.50 instead of the usual £26.00. although £26.00 sounds rather steep for a dozen cakes, i guess that price is mostly down to "rip off Britain", for selling them at £6.50 meant, according to Ms Brown, a £2.50 loss on each order. we shall get back to all the interesting points there in a moment.

Ms Brown, confident that there would not be much interest in this, offered this discount on some sort of bargaining site called Groupon (google it if you like, i am certainly not plugging them here) and promptly received over 8,000 orders, which "surprised her". she claims the incident has wiped out her profits for the year - my maths says thats £21,250.00 on orders alone, plus she claims to have spent a further £12,500.00 on extra staff and what have you to meet orders. that's a, if you will, consolidated loss of £33,750.00.

what interests me is that Ms Brown has been feeding the press, who have a natural disposition to hate the internet anyway, the story under the title "my Groupon hell" and they are actually reporting it as such. err, what? i am no business type chap, but i do know that if you are going to sell something, you should sell it at least to break even, ideally at a profit if you wish to remain in business. costing something and working it out as being sold at a loss means you should not offer it at all, let alone splash it over the internet.

i suppose she has clawed back some publicity and possibly hopes for sympathy by giving the story over to the press, but has she really? let's look at the figures shall we. if £6.50 equals a £2.50 loss, that means the break even costing of this item is £9.00, does it not? and she usually sells them for £26? so "usually" they sell for one pound short of triple the price they cost to produce, meaning there's usually a close to 200% mark up on the items? no one begrudges people making a profit, for that is how the world turns, but isn't that a bit excessive? i think this is where the phrase "rip off Britain" gets some justification, and it is rather difficult to imagine exactly who is going to be sympathetic to her quite frankly stupid business decision.

if i have overlooked or missed something let me know, but if i made this kind of mistake i am not too sure i would be keen to advertise either my stupidity or by just how much i usually mark up my products!

in the mean time, let me leave you with some proper bakers, with the warning that the contents of the below are possibly not suitable for the younger readers!

be excellent to each other!!!!!!!!!!!!!!!!!
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