I recently took a gamble by buying a second hand ice cream machine. It is a small volume Tropical Ice Cream Machine that cost £200. The economics are straight forward a 1litre sachet of ice cream mix costs £1.09 and makes 9 portions. I calculate that each portion costs 40p including the milk that is added to the mix, the cone or tub and the electricity to power the machine. Our retail price is £1 and this gives us 43p gross profit.*
Last week we made over £200 profit from the ice creams we sold so have already covered our original investment.
To promote the new product I bought a supply of small tubs to use in a sampling campaign. In the first few weeks after installing the machine my counter staff and I gave these taster samples of the ice cream to as many of our customers as we could. Most people liked ice cream and many of them bought a cone immediately. For others who said that ice cream wasn’t for them my team and I encouraged them to try the sample. We have been pleasantly surprised how many we have converted.
So our high volume of sales achieved in the first Spring like week of the year happened because we had invested in making people aware of our new line and I am looking forward to greater success if we see a pleasant Summer!
Gross Profit calculation
- Retail price £1.00
- VAT 20%, £1/1.2= 83.33p ex VAT retail
- Cost per portion. 40p
- Gross Profit. 43p