Can anyone speculate the cost of materials for Stern to build a Premium version of a pin? Excluding upfront development cost of course.
Assuming Stern works off a 50% profit margin- and 8% going to distributors- works out to 42% net profit for each machine that ships out of their building.
Ok.. let's go through this- I know I am probably wrong, but just going off napkin math, maybe people can correct or add to this math and we can get a pretty accurate ballpark/guesstimate here:
1) Assuming sold price out the door, shipped, etc of $7600
2) Shipping cost $325.00 (Stern gets a discount due to volume)
3) Distributor gets a 8% cut after shipping costs, that works out to $582 profit for distro
4) Stern receives a net of $6,693 for the machine itself
5) BOM's estimated at $1792.00 due to supply chain discounts due to volume (cabinet, playfield, decals, all components, etc)
6) Assuming 40 hours of assembly time paid at the rate of $22/hr would be $880.00 in labor
7600-325-582-1792-880 = $4,021 profit per machine. Not bad. But factor in obvious operating costs such as management/admin, employers costs, rent, electricity, maintenance on assembly line machines, etc etc.
Assuming 20 pins are completed and shipped per day, thats 100 per 5 business day period.
Cash flow on a monthly standpoint would mean Stern is netting for the pins themselves $1.6m per month, and likely more due to LE's and SLE's ... but for the sake of simple math we'll just assume the average profit across the board equals $4,021 per month
That means Stern's monthly cash flow is around $1.6m per month, or $19.2m annually
Assuming 165 employees make an avg of $44K per year with benefits factored in, that is $7.2m annually
Assume 35 additional management level employees average is $90K per year, that is $3.15m annually
Assume Gary's salary + bonus is around $1m/yr
Factory annual rent (if not owned out right) $275K
Jody Dankberg's annual subscription to Brazzers: $119
Jody Dankberys annual keyboard replacement cost due to Facebook customer service rage fits: $678
misc expenses - $1M / annually
Stern's net annual profit is $6.5M
Assuming Stern is bought out, using a P/E ratio of 7 plus any assets they may own- would mean there is a valuation of around $46-49M if it was to be bought out
Ok I went a little far with that.. but let's just say they are decently profitable as a small business and they are likely trying to boost valuation at this point to sell.