netration of 5%. This means that one out of every 20 microwaves sold will be a SmartWave. Using the 2000 sales figures as a conservative estimate for 2002-2003, this translates to annual sales of 850,000 units for the SmartWave in its first year.2.2.2 Unit PriceFor 2001, the average retail price of microwave ovens ranges from $69.00 to as high as $375.00 depending on size, wattage, and features. The SmartWave is a 600 watt, 1.2 cubic foot oven and would normally sell in the range of $79.00 to $109.00 retail. Because of its unique capability and corresponding advantages, the SmartWave is retail priced at $99.00, or about $5.00 higher than the average competing (non-UPC scanning) unit. The wholesale price for the SmartWave will range from $55.90 to $65.00 each, depending on the number of units purchased. Refer to section 0 for a detailed analysis of market pricing.2.2.3 Potential ProfitDevelopment costs for the SmartWave are expected to be $1.2 million over the 20-month development effort. Direct manufacturing costs are $24.00 per unit based on production runs of 100,000 units. Other ongoing costs such as general and administrative (G&A) and overhead costs are $19.5 million per year. This translates to a total cost per unit of $50.82, and resulting profit of $5.08 per unit or $4.3 million annually, calculated as follows:The above figure assumes that all sales of SmartWave products by SmartWave, Inc. are wholesale sales with a unit price of $55.90 and that annual sales volume in the first full year of production is 850,000 units. Refer to section 4.0 for a detailed analysis of costs and profit.2.2.4 Long-term EstimatesLong-term growth of profits for SmartWave, Inc. will be assured through the continuous development and introduction of innovative SmartWave products into the marketplace. Based on the business plan for SmartWave, Inc., a 20% annual earnings growth is being projected over the companys first 5 years.2.3Product Require...
