Latest: Investment In Birdnest Processing

This email message came to me yesterday from by dear friend who wanted to start his birdnest processing center in Pahang.

I am trying to do some fine tuning of the profit margin that I grossly over estimated:


Hi Harry,

Refer to our tele-conversation,

Please be informed that we are wholesaler of bird nest and at same time, we also provide processing and we do our own farming.

Do to our wholesale volume much higher than our farm production, therefore, most of the time we have to buy from other suppliers i.e. indonesia, malaysia and thailand. Wholesale margin not as high as retail but we are talking about volume of sale. Therefore, for malaysia office, yearly turnover close to 1000kg.

Beside we sell processed bird nest, we also sell unprocessed bird nest (Raw).

In my previous email, i have mentioned about the cost of processing and also the price that we are selling. In order to make better profit, we and you have to control the cost of raw material.

Processing fee incl. vacuum packaging with 500g each pack (460g add moisture to become 500g).

House Nests
white Rm800/kg
yellow Rm700/kg
red rm500/kg

Cave Nest
a. Red nest Rm500/kg
b. White or Yellow Rm700/kg


Our wholesale price for processed birdnest are as below (rm/kg) (based on indonesia nest)
Cookie Broken Corner CUP
a. White 3100 4200 5000 5700/5800
b. Yellow 3100 4200 5500 6300
c. Red 3100 4200 5800 6700

Example : For white nest

Assuming u can get raw white nest (cup) at Rm4200/kg full dry. + 800 process = Rm5000
assuming 1kg white nest u can get 860g MIN. after process AND we sell at Rm5800***, that mean the gross margin is m800. So may be we can buy from u at 5400 or 5500.

You may feel that the margin is low, ie only few hundred rm BUT wholesale is talking about volume. secondly, let say u make rm300/kg as compare to total investment per kg incl. process is rm5000 = 6% return x times of turn over per year, it could be more than that.

OR may be u can consider use Indonesia coloured nest (yellow or red), i'm sure the margin is better. The raw material u can either buy directly by yourself in indonesia OR buy from us. as long as u know the processing fee and also my selling price, then u can start to work backward for the profit.

ALWAYS remember, wholesale refer to volume of sale not margin per kg.

Pls feel free to discuss with me, if u have any queries. Thanks

Regards,

Looking at his explaination, I conclude the followings:

1)The margin is around 800 to 1200 per Kg.

2) If the same money is utilized for 6 times a year, U can earn 6 X 800 per kilo per year.

3) The coloured nests can fetch a better margin.

4) If we can find our our buyer then we can sell at a better price but if not we have him to buy from us at wholesales price.