Crunching The Numbers – Initial Investment

So, you are thinking about or are already a LuLaRoe Independent Consultant. If so, then you are on the first step to what could be an amazing journey.

First off, every business is different and everything in this awesome world is unique. You might have different experiences or results. I would love to hear about them! Leave a comment with your experiences.

As a potential or new business owner, you probably have a million and a half questions. Don’t worry, everyone has questions in life and business. Know that you are not alone. 🙂

I want to help with whatever questions you have. So, if you have questions that you want to have answered leave a reply or fill out a contact form!

This is the first post in a series about Crunching The Numbers. Many more questions to be answered in future posts!

One of the first questions you might be asking yourself is whether or not your initial investment into LLR is going to be worth it.

As you may already know, there are three Onboarding Packages with LLR. Each package contains a set number of pieces in certain styles. However, the colors and patterns are completely random.

Here are the three packages and rough prices:

1. Initial Order Package #1
   • 310 Pieces
   • $4,900
2. Initial Order Package #2
   • 390 Pieces
   • $8,700
3. Initial Order Package #3
   • 515 Pieces
   • $9,000
   • This package includes Leggings
4. Add-on Package
   • 105 Pieces
   • $2,000
   • This package includes Leggings

This means that your initial investment is at least $5,000 and $11,000 at most. To most, this a considerable purchase that should be made after thinking it through and planning things out.

I will do the following computations using my sister as the example. She purchased the first package in early October 2016 and has made several more purchases since. For this post, I will only use the initial purchase.

The initial order cost $4,997, including the 5% discount given to LLR consultants. With 310 pieces of clothing, the cost per piece is about $16.11.

The LLR suggested pricing on the styles included in package #1 ranges from $34 to $48, with an average retail price of about $38.80.

310 pieces at a cost of about $16.11 each that can be resold for about $38.80 each.

The average profit margin on a single piece of clothing is about $22.49, or about 59% of the sales price.

$38.80-16.11= $22.69

$22.69/38.80= 0.585 = 59%

That is a great margin! With no other costs, you would be able to recover your investment after selling 129 items from your inventory at the suggested retail price. 😀

$4,997/$38.80= 129 items

The profit on the remaining  181 items goes toward other business expenses or towards your goal. If you wanted to buy a new car or pay off student debt, this is your first step.

See this post in the Number Crunching Series about cutting costs other than inventory.

Your other costs might be very high, or low, depending on your strategies and needs. As a Tax Tip, write down all of your costs. Keeping good records should be one of the priorities of your business. Subscribe for future posts about good bookkeeping tips.

The computations above do not take into consideration discounts or freebies given to friends, family, or pop-up hostesses.

BONUS INFO!!

Costs are by the “model” and not by the size. For example, a Cassie Large is the same price as a Cassie Medium. However, a Cassie Large is not the same prices as an Irma Large.

The costs of the pieces you can buy range from $13 to $34, not including the 5% discount.

The highest suggested retail price for a single item is about $80. While the lowest is about $20.

There are “Elegant” versions that cost and sell at higher prices. The above information does not include any elegant variations.

Judgement

My opinion is, joining LLR can be a great business decision and based on the numbers it is a profitable model.

With a profit margin of almost 60% of sales, the product does pay for itself.

HOWEVER, do not think that LuLaRoe is a get-rich-quick-scheme. It takes lots of work, it is a business. If you are willing to work hard, you can make some pretty pennies.

Joining LLR is a big decision to make. I recommend that anyone who is considering it should discuss the idea with family, friends, or tax/business professional before taking any actions.

A few suggestions:

• Create a plan
  • Set goals
    • See this post about How to Eat an Elephant!
  • Plan with the end in mind
• Follow through with your plan and goals
  • Success is the result of small steps
    • Jenni Pierson recently met her goal of having 4 pop-up parties planned for the month January

 

This blog was inspired by the wonderful team at Shop Girl Anonymous. Go check them out for some fantastic posts!

What do you want to have ‘Crunched’ next?! Leave a comment with your suggestion or fill out a contact form.