How to make the mobile disco more profitable
In the Manic Mixers business, there are two costs involved. One is the variable cost and the other is the fixed cost. If the owners were to reduce the cost they would attract much more customers and benefit with more revenue. At the moment the Manic Mixers have around three bookings be month. Each booking is charged at 85. If this price was lowered this would be another attracting factor. Alternatively if they raised the price by around 5 they would still achieve the same goal. With the extra income, more CDs could be bought.
This would make 90 value for money with the new music. If there was a change in the variable cost it might solve the problem of the profit income the Manic Mixers are looking for. They could decide to reduce the charge on Petrol and light bulb breakages. This might be a disadvantage, reducing the costs, which would make the business suffer. It costs a lot to keep a business going. Reducing the variable cost for petrol they also reduce their travelling distance, losing out on customers. When the Manic Mixers travel to a venue they might have an accident.
There would be a definite inflation in the variable costs. This would not help the owners Profit margin or ease the Loan repayments. The changes in making the mobile disco more profitable could look a bit like this. Another way of making the mobile disco a more profitable business would be to increase the price. We assume that the Manic Mixers have three bookings per month. When a business is set- up, research into what you are selling, at how much and to whom is important. With out knowing these succeeding the business is hard to accomplish.
I recommend that for the first few months the Manic Mixers should do their homework and find out how many bookings they could get per month and at what price people are willing to pay. There is no point in desperately trying to change the price or the number of bookings and finding out that the business is failing. The Manic Mixers would then be in a situation where there would b costs to be paid and no output to pay them with. Alternatively if the Manic Mixers can produce something clearly of better value than its competitors’ product than there is a sign of profit income.
As long as the mobile disco is seen as being good value and good fun, it will not have trouble getting bookings. It might be an idea to lower the price rather than increasing it. Lowering the price might also turn out to be the only option in order to obtain more and more bookings per month. Apart from good value and fun the mobile disco has to be well organised. After the Manic Mixers have done their research into their potential customers, the change in making the mobile disco more profitable could look a bit like this.