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.
With this plan and the extra profit coming in, the Manic Mixers could get special tools to hold securely their equipment to avoid breakages. If this idea succeeded, then the price for breakages could be lowered. This would help their Profit even more.
I recommend that they should change their variable costs in order to further their business. If the business collapsed or there was a lack of customers, the extra profit they could be receiving could be an option to fall back on if in trouble.
Increase Price?
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.
From these projected results, research is an important factor when thinking about changing price. This plan shows that sometimes decreasing price is a better option.