Cost Analysis
System Cost
This is a monthly subscription structure where the different tiers offer different levels of service. Cin7 distinguishes these needs based on how “established” a business considers themselves to be. Larger, more complex businesses may need the “enterprise” level while a new single category business may only need the “starter”. The variables in this system include the number of users ($45 per user per month) and the number of extra applications such as “premium support” or extra apps that Cin7 explains in their costing structure. All tiers offer a free trial period and live customer support. Cin7 is remarkably transparent about their pricing. The structure operates as described above.
Fixed Costs
(source: https://costaide.com/laptop-cost/)
(source: https://business.comcast.com/internet/business-internet)
Financial Impact As a startup enterprise the financial situation of WANT NOT: Farm to Health is still under development. We anticipate that in addition to the initial costs of subscribing to Cin7, WANT NOT: Farm to Health would incur the costs of the computer hardware associated with using a cloud-based system, as well as the cost of reliable Internet access (Gallaugher, 2016). Other budgetary line items will include paying staff, travel costs for meeting with farmers and transporting goods, the costs of a fleet for transportation and storage space, and traditional marketing expenses. Initially, we could work from home or other free spaces, such as the Carnegie Public Library, to save on costs related to renting office space, which allows us to invest further in our ERP system, Cin7. WANT NOT: Farm to Health looks to disrupt the current purchasing and distribution model of surplus produce from farmers to health care institutions, and having smart, connected systems, such as Cin7, will assist the company to expand functionality while being more reliable and having a higher product utilization (Porter and Hepplemann, 2014).
This is a monthly subscription structure where the different tiers offer different levels of service. Cin7 distinguishes these needs based on how “established” a business considers themselves to be. Larger, more complex businesses may need the “enterprise” level while a new single category business may only need the “starter”. The variables in this system include the number of users ($45 per user per month) and the number of extra applications such as “premium support” or extra apps that Cin7 explains in their costing structure. All tiers offer a free trial period and live customer support. Cin7 is remarkably transparent about their pricing. The structure operates as described above.
Fixed Costs
The fixed costs include the tier of service and the how many employees are using the system. For example, a “starter” business with five employees would pay $299 per month plus $225 per month in employee usage. However, the Cin7 costing structure is such that companies may need to reevaluate their pricing plans quickly. If Cin7 really works in increasing sales and productivity, it is reasonable to assume that companies may need to move tiers and add employees to the software regularly.
As for WANT NOT: Farm to Health, we would assume a “starter” position with four employees, costing $229 in software fees and $180 in employee fees per month; $409 total. However, as soon as we grow and need to add third party logistics or “premium support,” our costs for Cin7 would rise, in accordance with being a B2B distributor. A study published in August 2017 from McKinsey&Company finds that businesses, especially in the B2B realm, today must have a strong sales force and a strong digital presence to succeed, and using Cin7 as an ERP (enterprise resource planning) system will be of use at WANT NOT and with its customers (Angevine, Plotkin, & Stanley, 2017).
Upfront Costs
Software |
Subscription
|
299
|
User fee
|
180 ($45 x 4)
| |
Hardware
|
Business laptops
|
2000 ($500 x 4)
|
Total
|
2409.00
|
Recurring Monthly Costs
Software
|
Subscription
|
299
|
User fee
|
180 ($45 x 4)
| |
Premium support
|
150
| |
Miscellaneous
|
Internet access
|
79.95
|
Total
|
708.95
|
Financial Impact As a startup enterprise the financial situation of WANT NOT: Farm to Health is still under development. We anticipate that in addition to the initial costs of subscribing to Cin7, WANT NOT: Farm to Health would incur the costs of the computer hardware associated with using a cloud-based system, as well as the cost of reliable Internet access (Gallaugher, 2016). Other budgetary line items will include paying staff, travel costs for meeting with farmers and transporting goods, the costs of a fleet for transportation and storage space, and traditional marketing expenses. Initially, we could work from home or other free spaces, such as the Carnegie Public Library, to save on costs related to renting office space, which allows us to invest further in our ERP system, Cin7. WANT NOT: Farm to Health looks to disrupt the current purchasing and distribution model of surplus produce from farmers to health care institutions, and having smart, connected systems, such as Cin7, will assist the company to expand functionality while being more reliable and having a higher product utilization (Porter and Hepplemann, 2014).
References
Angevine, C., Plotkin, C. L., & Stanley, J. (2017, August). When B2B buyers want to go digital--and when they don’t. Retrieved October 17, 2017, from http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/when-b2b-buyers-want-to-go-digital-and-when-they-dont
Gallaugher, J. (2016, July). Information systems: A manager’s guide to harnessing technology (5th ed.). Flatworld Publishing.
Porter, M. E., & Heppelmann, J. E. (2014, November 1). How smart, connected products are transforming competition. Retrieved October 17, 2017, from https://hbr.org/2014/11/how-smart-connected-products-are-transforming-competition
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