Business Analysis of Cluptrips

Business Analysis of Cluptrips?

Business Description

Club Trips is a mobile application helping travelers find underground electronic music clubs worldwide. As well as that, it makes sure that clubbers never lose their party crew while being at the event.

Problem

• 1. Underground electronic music lovers waste lots of time to find a proper event while traveling abroad. Usually, it takes a couple of days to find a right venue that satisfies their music taste.
• 1. After going out in large venue spaces, huge electronic music festivals or big clubs, it is easy to lose your party friends.

Solution

A mobile application (Android/ iOS ) that is targeted to people that search for underground electronic music events while traveling.

• It shows them the parties in their neighborhood that satisfy their taste (including house parties) and notifies them if the pop-up events are taking place.
• The app prevents its users to lose each other while being out. It allows them to register the party crew (under a name, color, Emoji) and track each other while being out. Assuming that we have more than 100,000 users, we are planning to make profit from premium membership, advertisement, getting commission from ticket sales and prices of creating events in the app.

Five Forces Model

Competitive rivalry: There are already similar apps out there but our target group of clients is more specific. And we are going to look into the problems these already established apps have come across and do those things better. Since it is an app, it is important to focus on the visual side and the easiness of using the app.

We have searched for the possible competitive mobile applications and software companies in market, and we have found three of them:

Supplier power: In order to develop our mobile applications, we need to be supplied by various software development tools like Google Maps, Firebase database, servers, Android Studio and Xcode software development environment, Java programming language from Oracle. For maps, we don’t have so many choices so Google Maps is pretty expensive and we don’t have any other alternative. For database, there are so many alternatives that’s why database prices are quite cheap.

Buyer power: Since there are approximately 3 billion android and iOS devices actively, we likely have a wide scale of customers all over the world such as club owners, organizations, entertainment companies and individuals, which gives us power on determining the prices.

Threat of Substitution: Because there are a few similar mobile applications that give similar services, and because they are not as specified as ours, they can not be counted as serious potential threat and they can not replace our application. Our application targets travelers and underground parties, and gives a worldwide service, which are the main features of it that differentiate us from others.

Threat of New Entry: Since our application requires strong and complicated engineering, creative design and professional marketing, only software companies which are bigger than medium size can deal with this process. But there is always threat of new entry in software development. For example, Uber and Lyft are based on same ideas, both of them are useful and rival to each other. In our case, there might be companies to enter our market, as well.

Break-Even Analysis

Fixed-Costs

Annual

• Rent: Average office in Tallinn costs: 36,000 €

Wage: 1 Manager: 36,000€

5 Software Engineers: 30,000€ for each = 150,000€

2 Designer: 24,000€ for each = 48,000€

2 Marketing personal = 21,000€ for each = 42,000€

Utilities

• Bills: 10,000€
• Insurance: 10,000€
• Depreciation: 5,000€
• Advertising: 10,000€

TOTAL FIXED COST: 347,000€

Variable Costs

Software Development Tools (Database, Servers): 100,000€ (1€ per person)

Revenue

Assuming that we will reach 100,000 users in a year, we are planning to make profit from premium membership, advertisement, getting commission from ticket sales.

Premium membership: 40 € per person (we assume that 10,000 people will be premium member.): 400,000€

Advertisement: 4€ per advertisement (we assume that 100,000 advertisement.): 400,000€ Commission from ticket sales: 1€ per commission from ticket sales (we assume that 100,000 ticket sales): 100,000€

TOTAL REVENUE: 900,000€ We expect that we will earn 9€ from each member per year.

To calculate break-even point, this formula is used. Break-even point: 347,000€ / (9€ - 1€) = 43,375

As you can see from the graph, in order to reach our break-even point, we need to have 43,375 users in a year. If we reach 100,000 users as we expect, our profit will be 453,000 € in a year.