Originally posted by Shaitan
This is a proposed expansion/clarification of the rules for private businesses.
Private businesses cost money to start up. The two basic costs in this simple system are material purchases and legal expenses. Material costs represent offices, stores, manufacturing centers, etc. The money spent on these become assets and can be sold to another player or liquidated at 50% of their original cost. Legal expenses represent bribes, kickbacks, hush money...er...i mean fees for licensing, etc. This money cannot be recovered.
Both of these need to be based somehow on the goods to be sold, so they will be applicable to all businesses in a fair manner. Legal expenses are the same no matter what the business does. Material costs will vary.
Base Legal startup expenses: 100 g
Base Material startup expenses
Heavy Manufacturing: 300 g
Light Manufacturing: 200 g
Resale: 100 g
Services: 50 g
Heavy manufacturing is things like vehicles, construction equipment, ships, etc. Light manufacturing includes trades (tanner, bowyer, textiles, blacksmith, etc.). Resale is the traditional store or market. Services are where actual goods are not exchanged but a value is provided through service. Manufacturers cannot sell to the public, only through resellers. If a manufacturer wants to also be a sales center they need to pay the legal expenses to do so (but no additional material costs).
This startup cost is multiplied by a ROI factor. This ROI factor is based on the original price list. A trinket seller is not going to have to pay as much to get into business as the new Audi sales center.
ROI factor:
Avg cost 1 to 10: use base
Avg cost 11 to 50: base x2
Avg cost 51 to 100: base x4
Avg cost 101 to 150: base x6
etc...with Avg cost increasing by 50 and base increasing another x2.
Let's start up some businesses
Tibu Teak, a custom habidasher is going into business. They are a light manufacturer (they make their own fine clothing and create custom designed T-shirts). They also will be selling their own products. The average cost on their price list is 5 g so they will use the base material startup cost of 200g. They pay 100g for fees to manufacture their product and another 100g for fees to sell their products. Their total startup cost will be 400g.
Apro, Poe & Nuffin, attorneys at law want to open a practice. They don't make or sell anything, they simply provide a service. The average cost of their services is 35g. Their startup cost will be legal fees of 100g plus 100g for material startup costs (50g base for services x2 for their high prices - they need posh offices and a big aquarium in the lobby to attract high paying clients). So they are in business for 200g.
Making money
For simplicity, cost of goods sold (material, labor, etc...everything required to get the product finished) will be 1/2 of the wholesale price. For resellers, cost of doing business will be 1/2 of the sale price.
The exceptions will be when there is an official store with the same item or if there are competing private businesses. With competing private businesses the highest price will be paid by all businesses. That is, if Bob's spear shop sells spears for 10g and Al's spear shop sells them for 6g they both pay 5g (1/2 of the 10g highest price) for their stock. Al won't make much profit but he'll sell the pants off of Bob.
The second exception is when there is an official store with the item. In this case, the official store sets the price. Say there's an official store with spears for sale at 8g each. Al and Bob both will pay 4g for their spear stock (1/2 of 8g).
Note that this makes manufacturer/sellers slightly more efficient as they don't have a middle man. Their cost is 1/4 of their final sale price. Then again, they have a much higher initial startup cost.
Services have no cogs or codb. Sounds too good to be true? Actually, no. It is much harder to sell a service than physical goods. Services oriented businesses will not make the quantity of sales that other businesses do.
Maintenance
Thought you were done paying? Hahahahaha. You slay me!
No, there are more expenses. Each term an additional amount equal to 10% of the original material startup costs must be paid for building upkeep, material replacement, etc.
Moving up
So what stops a business from issuing a weak original price list and then just jacking up the prices when they're in business? Moving up charges!
The average price on a price list cannot go to the next level ROI factor until new material costs have been paid. The cost paid is their base cost x2 for each level the average will go up.
G.A.A.P.
Somebody needs to be in charge of watching prices. Jet planes cannot be sold for 100g if that's what a house costs on the official lists. Price gouging and fixing are easily corrected by adding items to the official price lists. Nobody's going to sell that jet for 100g when it's on the official list at 5000g (and will thusly cost them 2500g to get from their suppliers).
Loans
These will be necessary for any business to start up at the beginning of the game and will also be desirable throughout the game. Loans for assets (material startup costs) have a 5% per term interest and must be paid back in 4 terms. Signature loans (for legal startup costs) have a 10% per term interest and must be paid back in 3 terms.
Selling the shop
Businesses can be sold or liquidated. When liquidated, 50% of the material startup costs are returned to the seller. If sold to another private owner the price is negotiated. The buyer will then need to pay normal legal startup fees.
Comments?
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