Re: [AGA-mcm] How much more TAG? -- some food for thought

["S. Hieber" <shieber@yahoo.com>]

Okay folks, just to let you know that we're talking about
two very diff proposals. I took the most recent cost data
and figured some unit costs and then looked at the cost of
the little bigger TAG (4 more pages-same format) and the
big bigger TAG (full size--same pages).

Looking at membership as the key target, and our chief
source of revenues, I then did a sensitivity analysis to
find the breakeven points and the net added costs of the
TAG with various numbers of additional memberships. The
part that makes this hard financially is that added costs
to the price of each TAG means each additional membership
costs more than before. On top of that, with more members,
you have more copies to produce at the higher cost. So it's
a bit like chasing your tail. The chase is impossible if
the revenue of a membership is less than the cost of
producing an additional TAG. Of course, as with all math,
if you change the inputs, the outputs change. If we get
better assumptions, I'd be glad to plug them in.

So here's how it works out for the two secenarios.

The little bigger TAG********************

Assuming 4 added pages to the current format costs about
10% more across the board -- the per copy cost increases
10%:

That would present a marginal annual cost of about $1,500
on 1200 copies, which I believe is our current print run.
That equates to about 63 memberships at an average rate of
$19 per membership. Put another way, we'd need to get
roughly 65 additional memberships to offset that marginal
cost of producing 1,200 bigger TAGs. *However*, with 63
additional memberships all the costs would go up because we
have to make and mail more TAGs. Once that is factored in,
the break even is much higher. It would take about 280
additional members to breakeven. Here's the net effect on
the AGA's bottom line of doing the bigger TAG with diff
numbers of additonal members:

    0 additional members->$1,500 lower annual AGA net revs
   50 additional members  $1,240 lower annual AGA net revs
  100 additional members  $  980 lower annual AGA net revs
  200 additional members  $  450 lower annual AGA net revs
  250 additional members  $  190 lower annual AGA net revs
  280 additional members  $    0

Could we eat $1,500 and stay solidly in the black?
Absolutely. Could we eat $1,500 *and* have a catastrophic
convention -- cancel the convention and pay the hotel
$5,000-$8,000? Yes, I think we could.

The Big Bigger TAG****************

Assuming a full size TAG costs 40% more to print and, at 
about double the weight, doubles delivery costs:

The would present a marginal annual cost of $8,000 on a
print run of 1,200 copies, which equates to about 445
memberships. However, we'd lose money no matter how many
additonal memberships we got because the cost of each
additonal TAG would be higher than the average revenue of a
membership. We would have to increse the average cost of
membership. If we raised that average cost to $25, then
we'd break even at 1,350 additional members.

If we did raise memberships to an average of $25 and assume
the higher price did not have a negative effect on demand,
then here's net effect on the AGA's bottom line of doing
the bigger TAG:

    0 additional members  $8,000 lower annual AGA net revs
   50 additional members  $7,700 lower annual AGA net revs
  400 additional members  $5,600 lower annual AGA net revs
  800 additional members  $3,300 lower annual AGA net revs
1,000 additional members  $2,000 lower annual AGA net revs
1,200 additional members  $  900 lower annual AGA net revs
1,350 additional members  $    0 lower annual AGA net revs


With less than $25 per membership, the impacts are worse.
Could we eat $8,000 per year and still be solidly in the
black? I think so. Could we eat it *and* lose about
$5,000-$8,000 on a convention and be in the black? I think
probably not.

sh

_Aquarium Plants_, Christel Kasselmann, will be speaking about plants and tanks 
at the NEC 30th Annual Convention

It's not too late to register. Get info at:

http://www.northeastcouncil.org/html/modules.php?op=modload&name=News&file=index
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