Where Does The Joey Revenue Go?
One of the things I like most about publicly-traded companies is that they're legally required to share all their financial information. I mean, there are people just like us who own shares in those companies, so we gotta know what's up.
The hard part for small businesses like ours is that our world is so cutthroat. If we shared our financial information, there will be a dozen or more competing businesses ready to leverage it for some malicious purpose.
Yet CCBR owes YOU, our customers, something. All businesses do. Our customers are what makes this business even possible, so why don't more businesses share information?
This is hopefully our first step in becoming a way more transparent company. Buckle up, because this is a little long.
I first wanted to start off with an easy-to-ready image. The size of the bubble is how much of our revenue goes towards it. For example, the biggest bubbles are product cost, taxes, and free shipping. That means most of the money you pay goes towards those things. Take a second to look this over before moving on, as I explain each bubble and why we have to spend money there.
A little note: some people may notice (and others may not), but you'll see we draw $0 for ourselves. That's right. Outside of a handful of technology we need to run the business, we take $0 out of CCBR to pay ourselves and we do not expense food, gas, or anything. (More on that below.)
Before we go onto the big costs, let's just get out of the way what we've paid for using company profits. To date:
- iPhone 12: Helen broke her phone and it was absolutely shattered. She uses her cellphone for work more than she uses it for personal reasons, so it made sense to make sure she was equipped with a phone she liked that also had good performance.
- HP laptop: Believe it or not, Matt did all of his work through his personal cellphone. With how fast the Joey ramped up, we had to get him a laptop, but we tried to be as frugal as possible. We spent less than $600 on his laptop.
- Apple AirPods: The amount of calls we do on a given day, whether it's with a shipper or manufacturer or our lawyers, is intense. If I had to listen to Helen using speaker one more time, I was going to explode. AirPods are known for being fantastic for taking calls, so it was an obvious choice for her.
You might be asking why we don't pay ourselves or expense obviously expensable things like gas. Well, we're just not there yet. A long time ago, I read a book called Leaders Eat Last by Simon Sinek, and that made a profound impact on me. Working at some of the largest tech companies in North America, I realized that overpaid "leaders" feast long before their customers and employees.
We want to be different. Nothing really changes perspective like seeing executives make over $250,000 a year while laying off employees and passing on price hikes to their customers. Yuck.
If we simply just not pay ourselves for now, we can use all that money to do more for our customers, for people (like hire them!), for our community, and for the world. You can see that below.
Product Cost + Logistics + Taxes
This is, by far, our largest cost. This also includes duties, importing taxes, importer licenses, and overseas shipping. I really should have made the circle bigger, but it makes up well over 70% of our total costs to the business.
People often ask why we do not offer a volume discount or large refunds on The Joey, and the real answer is that it's just not feasible...not yet at least. That's something we're working on in trying to get the cost down, but our already low price (it's an industry best) + increases in shipping premiums due to the chaos in shipment means we have less cash to be able to pass back to customers.
Many of our customers know how flexible we have been, which is why we're trying our best everyday to figure out how to pass on more savings to customers. We truly want a world where customers are not taken for everything they got.
Taxes are a bit self-explanatory, but we gotta pay importing taxes based on the type of product we're importing. We pay approx. 15% in taxes to import the Joey.
One thing we wanted to offer in Canada was free shipping. It's, like, the best thing ever, right? But Canadian customers very rarely get to experience free shipping. Ask any small (or big) business owner, and they'll tell you shipping in Canada is $$$. We've had dozens and dozens of businesses ask us how we can afford free shipping and we tell them that we just take a profit hit.
We're not some magical guardian angel, but we know COVID has been tough, especially on people's pockets. The last thing anyone needs is to pay $50 - $60 just for shipping. That's something that wasn't even a question when we offered The Joey.
Third-Party Vendors + Marketing Technology
Shopify, Sezzle, Paypal, credit cards, Klaviyo, and other vendors all need to make money, too, but this is a cost not a lot of people factor in. Every time you make a purchase in our store, some other company is charging us a percentage, anywhere from 2.5% to 4% transaction fees + a flat $0.30 per transaction.
If someone requests a refund, that money doesn't ever get refunded back to us. For example, if we pay $2.80 to process a $100.00 order but then we refund that $100, we lose $2.80. If someone wants to cancel their order but then chooses to repurchase, we pay that $2.80 twice!
Some of this stuff also scales with how big our user base gets. The more people who visit our site, the more certain apps and technologies will cost us.
Research & Design + Samples
Did you know we were the first play couches to over a zipper cover? Or the first to offer add-on pillows? We also made promises to look into Canadian manufacturing as well (need samples for those!). All of that comes from our research and design plus vetting our samples to make sure the quality is up to snuff. Technically, this came from the money we made on the Mask Buddy, as we didn't really have any Joey revenue, but we're always reinvesting it to bring cool, new things to people. For us, the most important thing is to make sure we have fun and so do all of our customers. Quarantine is already tough, so this gives us a chance to do things no one else has yet.
Does that mean there are new colours, never-before-seen products, and Canadian-made samples coming? You betcha.
Designer & Developers
As much as I'd like to think I made that beautiful graph at the top of this blog, I did not. That was our designer, who has been doing some incredible work. She has been making some really great stuff for us, and it's important we give people things that are as beautiful as they are. (Who wants something all hacked up piece of trash that I did? No one wants to see my art skills haha.)
We also realized early on that we really need to overhaul our website, because we have run into back-to-back technical issues (all thanks to Shopify!) with our pre-orders. If our customers can't easily navigate or checkout, why even bother?
In the end, we're also supporting talented, Canadian people who are passing on great things to you all.
Giveaways + Philanthropy
We are, to date, the only play couch company (to our knowledge) that has donated any play couches and money to charities. We have also given away the most couches and products, too.
We don't do this to get praise, but we mostly do it because we know what it feels like. Throughout our childhood and as parents ourselves, we know what it's like to want something for ourselves or for our kids and not be able to get it.
The last thing we want to do is have other kids and parents feel like this. Nothing hurts a parent more than watching your child want something they can't have.
In the end, we have a moral responsibility to our own personal CCBR community plus the world at large.
And That's All, Folks!
There are some bubbles I didn't address, but those are a little self-explanatory. What I really wanted to accomplish is to explain where all of it is going. If you have questions around this, please email us at firstname.lastname@example.org or ask a question in our Facebook group!