Log in to become a member of George O Neill's Fan Club!
In how to evaluate the purchase of a quilting machine guide, I have taken a simplistic approach to time, costs and payback. There are more scientific models available such as net present value and discounted cash flow but I wanted to provide a quick easy evaluation for those who are considering purchasing a quilting machine and wanted to know how the costs can be evaluated over time and how long it would take to recover the costs incurred.
I have taken four values for costs, these represents the low end, average through to the higher end quilting machines. These values are $7500, $10,000, $12,500 and $15,000.
Time periods are the length of time to recover the above costs of the quilting machine.
The payback time is the length of time to recover the costs of the quilting machine if one was to add a proportion of the costs to each quilt produced. Obviously if one produced more quilts over a certain time period one would achieve an earlier payback point.
The Tables below illustrates the above factors of cost, time and payback over 1 year to 5 years for each value range. The payback period shows various calculations which will be dependent on each quilters circumstances with regard to the number of quilts produced over a given time period.
Table 1 Cost of Quilting Machine per Year
Value $7,500 $10,500 $12,500 $15,000 Time 1 Year $7,500 $10,500 $12,500 $15,000
2 Year ($72.11) ($100.96) ($120.19) ($144.23) (104 Quilts)
3 Year ($48.07) ($64.10) ($80.12) ($96.15) (156 Quilts)
4 Year ($36.05) (48.07) ($60.09) ($72.11) (208 Quilts)
5 Year ($28.84) ($38.46) ($48.07) ($57.69) (260 Quilts)
Table1. Illustrates the annual costs for each quilting machine over 1 to 5 years.
Table 2. shows how much the quilter has to charge to recover the quilting machine costs based on producing 1 quilt per week over each time period.
The above figures do not take into consideration any interest charges you may have to pay for the finance of the quilting machine These additional costs would need to be included in the above figures. Neither do the above figures allow for any tax allowances that can be claimed against capital equipment. The figures are only to illustrate how much each quilt produced should contribute to the cost of the quilting machine and how to recover the quilting machine costs in your quilting pricing.
A basic breakdown should be undertaken for all equipment used, materials and overheads such as rent, electricity. One then adds labour costs and profit margin to arrive at the quilt sale price. Depending on ones business model and sales potential and local market conditions it would be matter of weighing up the benefits of various quilting machines for efficiency and output. With the above figures one can see at glance how the quilting machine costs can be recouped over various time periods based on the output of one quilt per week.
George O'Neill publishes articles, reports on matters relating to quilting, quilting machines, materials, patterns and quilting tools. To download articles and reports please visit: http://www.quiltingpeople.com
Was this article helpful to you? Leave a Public Comment or
Question:
This Article has been viewed 100
times.
Article added to SearchWarp.com on Thursday, October 25, 2007 View other articles written by George O Neill(39)
If you found this article interesting, you may want to check out:
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
