Tuesday, September 29, 2009

Little Money, Big Money - What is the difference between doubling £1 or £1024??

Obviously apart from the emotional aspect of dealing in single £'s or £1000's of £'s; if you start to think how you could spend your seed, outside of the challenge or consume your seed, you might start to loose your way! It must be interesting to see when if people are heading for £1 million, do they chicken out? and at what kind of amount? Just as it's interesting to watch people playing game shows like "Who want's to be a millionaire" or "Deal or No Deal"; to see if their nerve goes; you can see them heading towards a particular amount, I guess their character comes into play; I wonder what those characteristics can be distilled down to?

I wonder if people will treat £1000 they had doubled to differently to if they had earned that money in a more standard way?

Because a one month period is a limited period of time, of average 4 weekends and 4 weeks there is a limited amount of buying and selling opportunities that may appear to the participant, only so many 10 day auctions, etc...

A Simple Equation??

b = buy price
s = sell price
e = buy and sell pair opportunities
u = units
p = profit

presuming you sell for more than you buy.

                 p = ∑e  u x (s - b)

So, what I am saying is from month to month e remains roughly constant, might be worth thinking about how you could make this larger - collaboration, something else?

I think u, s and b are your main variables to play with as your monthly seed and targets move up and up throughout the year, so in other words, you can either sell more of the same stuff (increase u or units) or you can change the stuff you sell; i.e. bigger ticket items, or at a wider profit margin - larger buy and sell prices - coining a banking term keeping 'positive jaws' where incoming growth exceeds outgoing 'growth'.

i.e. for my shortbread example

b = buy price = 0.9p
s = sell price = 12.22p
e = buy and sell pair opportunities = 1

u = units = 30

             p = profit = 1 x 30 x (12.22p - 0.9p)

So for the rest of this month I could have more e's, and now my seed fund has increased I could increase my u's

But for the £512 to £1,024 month I would have to sell a large volume of shortbread to achieve my target and the limitation of e's in a single month could prove a challenge. Thou certainly not impossible.

Probably it's easier to raise the ticket price of the type of items you are targetting though you would expect to find it harder to find the same kind of margin; though I should learn to not pre-judge, if that is true - there is probably a fine balance between the possible profit margin and size of the price of the items.

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