Introduction
When creating a marking strategy, it is crucial to create a comprehensive budget to understand if the cost of the marketing strategy is adequate in comparison with the expected profits. The budget needs to be prepared for up to three years and include an overview of projected income. The present paper provides an estimation of costs and revenues of UAV Pro for twelve months, starting from January 2021, based on the current trend in sales. The budget plan will also take into consideration the changes in the marketing plan and brand management.
Revenue Estimation
The central problem of creating a realistic budget for a new product is estimating revenues, as the data on demand for the product is rarely available. Fortunately, UAV Pro has a history of sales as AirBolt GPS, which can be used for making estimations. The project on Kickstarter started on August 30 and reached the desired goal of AU$50,000 in just 7 hours (AirBolt, 2020). In one month, the project made a little over AU$1,000,000, which is approximately $750,000 (AirBolt, 2020). The demand for the product is expected to decrease with time; however, the implementation of an aggressive marketing campaign and rebranding is expected to raise the interest in the UAV Pro. Thus, projecting $750,000 of monthly revenues for FY 2021 seems adequate, as sales are expected to be the only source of income.
Cost Estimation
Cost estimation is crucial for understanding how much income a company should make considering the needs of production and distribution. The costs can be divided into operating costs and income taxes. While companies often have costs associated with long-term and short-term debts and legal obligations, UAV Pro is not expected to have any such burden in FY 2021. Thus, the categories included in the costs will be limited in comparison with already operating companies. The analysis revealed at least 13 cost categories, excluding taxes. Since the company is located in Australia, a 30% income tax should also apply to the revenues.
Budget Analysis
Table 1 below demonstrates the quantified estimation of revenues and costs for FY 2021. The estimations are based on the assumption that the company will want to make significant investments in research and development since it is a high-tech product. Additionally, the company is not expected to need many employees; however, all of the workers will be high-skilled. Finally, the production of UAV Pro is expected to be offshored to China, which will help to make the product cheaper.
Table 1: FY 2021 budget for UAV Pro in US dollars
Conclusion
Budget analysis reveals that UAV Pro is expected to have financial success. Net income for FY 2021 is expected to be almost $2,500,000, which is very high in comparison with the total expenses. The net profit margin of the product is expected to be as high as 27%, which can give the company a lot of flexibility. The income can be invested into development to increase profits in the future.
Reference List
AirBolt (2020) AirBolt GPS – Global Tracking as It Was Meant to Be. Web.