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Profit Margin For Local Ski Manufacturers

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C-DAWGSTYLEZ
Posts: 832 - Karma: 171
Hello NS,

I am currently writing a mock business plan for a ski manufacturing company for school, and to complete this plan i need to know some rough financials, and demand statistics. Specifically i am looking for

- average cost to manufacture a pair of skis.
- Estimate of profit margin for skis.
- Typical annual sales of skis.

I am looking particularly for information that relates to smaller local businesses, such as ON3P, Moment Etc. Any information or rough estimates would really help me out, ++++ K for good answers.

Cordially,

C-Dawg Stylez
Jun 21 2010 5:57PM
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selkirks
Posts: 1978 - Karma: 59
PM iggyskier or any of the ON3P guys; I'm sure they'd be happy to help you.
Jun 21 2010 5:59PM
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C-DAWGSTYLEZ
Posts: 832 - Karma: 171
Ya i have tried to get in contact with a few small companies, including ON3P. However legal obligations tend to be keeping them from giving me much information. I just need some ballpark estimates and i am running out of places to go.
Jun 21 2010 7:23PM
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TWoods
Posts: 10014 - Karma: 8,386
I heard once that Liberty (back in the day when they were real small) used to spend about 150 making a ski. That's a pretty wide ballpark estimate though, which depends on so so so many things.
Jun 21 2010 9:22PM
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prophet
Posts: 4734 - Karma: 1,007
K2 is publicly traded and makes their statements available... you might be able to dig out some numbers from LINE.
Jun 21 2010 9:52PM
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Elmo.
Posts: 4317 - Karma: 663
yea this is a good place to start
Jun 21 2010 9:59PM
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Zump.
Posts: 3338 - Karma: 305
K2 is on the stock exchange? No way!
Jun 21 2010 10:05PM
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special_k10101
Posts: 1498 - Karma: 72
yup
it's part of Jarden Corp, a big conglomerate.
Jun 21 2010 10:08PM
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Zump.
Posts: 3338 - Karma: 305
woah, I guess volkl is too
Jun 21 2010 10:42PM
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pbandj
Posts: 5610 - Karma: 28
jarden corp owns just about fucking everything related to "extreme sports"
Jun 22 2010 12:47AM
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IHOP
Posts: 2155 - Karma: 19
It might be impossible for you to do this project.

Private companies will never give you their financial information. If they tell you its because of "legal" reasons, most likely they are just polity telling you to go away. That information is PRIVATE.

And from what I've heard so far in this thread, the ski companies that are public are just investment companies. These companies will report in consolidated statements so there is absolutely no way that you would be able to get any information for a particular company under their investment (unless they happen to separate them out, which is very unlikely).

If the goal of your project is to find real simple finanical info, your best bet is to find a large publicly traded company that is not a holding or investing company (i.e., apple, walmart, intel, etc.)

Good luck.
Jun 22 2010 1:51AM
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Literature
Posts: 13673 - Karma: 3,085
SIA has a huge publication on these sorts of numbers, but it's hard to get outside of the industry and more expensive than a school project warrants.

An industry with more public numbers might not be a bad idea.
Jun 22 2010 2:29AM
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J.DUKE
Posts: 1233 - Karma: 38
ask RMU. they are friendly blokes
Jun 22 2010 1:17PM
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Wibby
Posts: 293 - Karma: 165
the actual numbers are most likely lower than you may think...support the brands you believe in with your dollars.  For your project, get creative and make up numbers, it does not need to be exact. 
Jun 22 2010 2:25PM
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teleak
Posts: 2251 - Karma: 105
^
Jun 22 2010 2:35PM
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C-DAWGSTYLEZ
Posts: 832 - Karma: 171
Thanks for all the constructive feedback, i have been communicating with on3p with a little bit of success and have sent emails to moment and RMU. Does anybody else find it interesting how hard information like this is to get from these companies?
Jun 22 2010 3:43PM
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IHOP
Posts: 2155 - Karma: 19
The fact that you got any nugget of info from ON3P is amazing. In real life you will never get financial info from private companies as an outsider (i.e. not a partner in the business). The only time people get financials from private companies that are seen by the public is right before an IPO, in legal suits involving valuation, or if you're an important analyst in a particular industry.

Again, it might be a good idea to pick a real simple and large public company. I think you would learn more about the basics of financial statements, which for you may be more important than specific industries.
Jun 22 2010 4:23PM
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grambo
Posts: 1125 - Karma: 93

Just make up numbers, for the purposes of developing a business plan in school the real numbers are irrelevant, your thought process and conclusion matter. Say:

Avg cost materials: $300

Labour per ski: $100

Overhead (rent, utilities, misc supplies, admin, website, marketing) $50

Volume per year: 1,000 pairs

Cost (not including paying the owners) per ski $450, total run $450k

On top of this you have to factor in capital costs (buying the press and other equipment), R&D etc. From that you can figure out what to price the skis based on a 10% ROI or something. This doesn't factor in demand risk, inventory risk and other factors. What you will probably find is that it is not very profitable and requires a HUGE time investment to get off the ground.

Jun 22 2010 4:27PM
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grown-ninja
Posts: 3031 - Karma: 175
find a magazine that has basic materials needed to produces skis for sale, such as side walls, certain type of bases, certain epoxy, different types of wood; poplar...etc,  and so on, a lot of shops and resorts have them, at least where i use to work,  the materials them selves are pretty cheep you might be surprised actually,  i wrote a business plan maybe 3 or4 years ago for a made up ski company ( STEESE SKIS)  freshman year in a principles of entrepreneurship class i might have it somewhere if your interested
Jun 22 2010 4:53PM
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j.bird
Posts: 6680 - Karma: 15
good god no one would make a dime off of skis if those numbers were right...
Jun 22 2010 5:20PM
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AndrewZ
Posts: 759 - Karma: 36
Take a look at snowboardmaterials.com for some prices on individual components. These prices are higher than if you were to buy in bulk, but should give you a starting point. Also take a look at skibuilders.com for some very experienced builders.

Contacting small companies is a good idea as some of them may be willing to give you some vague numbers, but make sure to respect their privacy and not disclose too much information when using the numbers in your report.

Here are a few other ideas that I had come to mind that you may well have thought of, but I'll mention them anyways. Think about whether you want to sell your skis through a retailer or not. Volumes will be much higher, but margins will be lower if you do; and if you don't, you have to budget for a much higher selling expense.

 As grambo was saying above you will be fine if you fudge the numbers a little bit as long as they have some basis (professors generally aren't that picky about details like that), but I would keep you overhead (fixed costs) as a separate category not included in the per ski cost breakdown, as it will make it much easier to explore potential revenues at different sales levels if only variable costs are included in the per ski costs.

Best of luck on the project, sounds like fun!
Jun 22 2010 5:38PM
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C-DAWGSTYLEZ
Posts: 832 - Karma: 171
Thanks Andrew, snowboardmaterials.com is the best site i have visited so far, and has given me a great rough estimate for material costs. Between this and the SIA website i should have enough information to write a solid pro-forma income statement.

Thanks again for everyone that has provided solid, positive feedback, i'll come back to this thread later if i hit any roadblocks.

Jun 22 2010 8:13PM
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pbandj
Posts: 5610 - Karma: 28
don't forget to account for where the skis are manufactured and such. a person who manufactures 1 pair of skis per day out of his parents garage in (insert town here) usa is going to have much larger costs to manufacture per ski than a factory in china cranking out 1000+ pairs per day.
Jun 22 2010 10:10PM
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CTD
Posts: 6300 - Karma: 348
yup. average cost of materials for skis from a small manufacture will range from 100 to 150, maybe 200. the amount of time that goes into each ski includes a couple phases, making cores is one big step, figure roughly an hour or 2 of cutting lumber, and then time in the CNC to cut and profile, prolly another 30 min or so. laying up materials and pressing the ski takes roughly .5- an hour, finishing them is another .5 hour, looking at somewhere around 3-5 man hours per ski, depending on the quantity your pushing out. figure if a press can pump out 10 pairs a day, you can figure your quantity per year, a press setup is roughly 10 K, (most companies run multiple presses) the rest of the tooling required to build and finish skis is another 10-20K depending on the quality of tooling, rent for a small manufacturing facility is gonna be 1000-2000 a month, number of employes making somewhere from 10-15 an hour, insurance per month, 500 or so for that, then you gotta budget things like distribution, marketing, keeping a website updated, etc. etc
Jun 23 2010 12:10PM
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grambo
Posts: 1125 - Karma: 93

You're right, my estimate was probably much too high. Great few posts above with more realistic numbers and also the consideration of producing in house or outsourcing to China (what Bluehouse does I believe).

If you want some easy marks, be sure to discuss inventory risk in your plan (the risk of producing too many pairs of skis and ending up having excess inventory you have to sell at a discount late in the season), you can talk about mitigating this by making deals with vendors to share the risk (sell them cheaper to the vendor, and if the vendor doesn't sell all pairs you split the difference on the discount). You can talk about services like Tramdock/Backcountryoutlet and potential brand dilution caused by deep discount pricing (e.g. someone sees last year ski on TD for $300-400, why are they going to pay $800 for it at the start of the season if only the graphic is different).

Jun 23 2010 12:47PM
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RMU
Posts: 120 - Karma: 2,912
Hit us up whenever will help you out!
Jun 23 2010 4:07PM
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