It is very difficult to understand product pricing in Mumbai. One doctor in a Mumbai suburb recently sold off his practice – well he actually sold off his shop. It is not a very big shop…and now an ice-cream parlor has been set up there.
Got chatting….with a couple of friends and found that the rent there is Rs. 88,000 per month. The ice-cream business is quite competitive and may not have too much of a margin – let us assume that the GROSS margins are about 20%? Now a shop with a rent of 88k..let us assume other expenses (electricity should be a bomb)will have total expenses of Rs. 130,000 pm. To earn this he will have to sell icecream worth Rs. 650,000 per month or about Rs. 26,000 a day. Now assuming each person who comes into the shop consumes Rs. 100 worth of ice-cream about 260 people will have to walk in every day. Looks tough if it has to happen every day.
Now look at this business from a doctor’s point of view. To earn Rs. 130,000 per month + equipment emi+….let us say he has to gross at the minimum Rs. 200,000 per month. Ignoring taxes is just a matter of convenience- many doctors do pay Income tax!
To earn Rs. 200,000 a month he has to earn about Rs. 8k a day IN HIS GENERAL PRACTICE -at Rs. 200 per patient it means he needs 40 patients to break even. Assuming each patient takes 20 minutes…it is 800 minutes a day to break even. Or it has to be priced better..
Either way both businesses cannot afford this kind of rent…neither does the location deserve it. If these are the rents in Ghatkopar…Santacruz can only be MORE. So doctors who are already there…can charge whatever they want and be as incompetent as they want to be – no new comer can threaten them. Simple locational advantage in a mad booming market where rents have no co-relation to the business that is being conducted there.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.