Manufacturing - taken the plunge

At the start of May, I took the plunge and I started up manufacturing properly.

May Numbers

I made sales of 26 billion isk and profits of 2.7 billion isk.

The Business Model - Revenues

I am going to use manufacturing to generate two types of revenue streams.

Firstly, to use it in the traditional manner of manufacturing an item and then putting it up for sale either in Jita or another of my trade locations directly.

Secondly, I will use it to effectively bring down the in-price of the items that I sell with my traditional trading business. So what I mean by this is it normally I buy from Sell orders in Jita and I courier those items out to all my trade locations and I put up for sale there. In this case of using manufacturing I will be able to get closer to the Buy price in Jita and therefore when I put those items up for sale in my trade locations I will command a greater margin. And therefore the way I will think about this is the difference between my manufacturing price and the Jita Sell order price will be the revenue for manufacturing business and then my trade operations take the usual profit of the difference between the Jita Sell order and what it manages to sell in its trade location.

Business Model - Manufacturing Locations

For now, my manufacturing will be done at a low sec location close to Hek and in Jita.

I have still not really worked out how best to transport high volume raw materials or minerals to my low sec location therefore for now where the item requires high volumes of minerals I will be using Jita until I get my head around all of this.

Business Model - types of item I will manufacture

Therefore the type of item I manufacture will be very similar to the business model are using my trade operations. In other words I will not be manufacturing high volume items. I’ll be manufacturing items that aren’t for sale in my normal trade locations and where the manufacturing price is closer to the buy price at Jita.

In other words high value, low volume, low competition, slow moving items.

Keeping track of profits

Because the vast majority of my profits will be made through my normal trading activities I will need to think of a way of keeping track of my manufacturing profits that doesn’t require me putting in individual items into a spreadsheet.

The way I’ve decided to do this is I will resurrect an old character, in fact my first character called croda as it happens, and I will use that character to purchase all the materials I’ll be using. I’ll leave that character in Alpha at the moment - update, i have now upgraded this to Omega.

This character will then contract all the raw materials free of cost to my Omega characters who are high on manufacturing skills.

Those characters will manufacture the item. it doesn’t matter who manufactures the items, I will capture all the manufacturing costs through the Excel addin.

Once the item is manufactured the finished item will be contracted back to the Alpha account Croda who sell it back to my Omega accounts who can then courier it to the trade location to be sold.

Therefore, using the Excel Aladdin, I can keep a track of all the wrong material costs all the manufacturing costs and all the revenues that the manufacturing generates for me.

. . . . . . now that i have upgraded that account to Omega which also has Trade Characters in Dodixie and Hek, i will be using these characters to sell the items as best i can.

Observations to date

I am just starting up so I have a lot of items I need to manufacture to put up for sale in my normal trade locations.

So you would expect almost all my revenues in manufacturing at this point to be internal sales from my manufacturing operation to my trade operation and therefore effectively you’d expect all my revenues in these initial months to be the difference between the Jita sale price and the Jita purchase price because the manufacturing effectively means I’m bringing these items into my operation at the Jita buy price.