Royal’s Software has embarked on an ambitious plan to create a new software product, Royal’s Inventory Basic–a scalable inventory software product. The new product is scheduled to be released in May and will be sold by Pursuit Solutions.
Pursuit Solutions, a $50 million company hardware integration reseller, will distribute Royal’s Inventory Basic to over 1,100 Valued Added Resellers (VARs). The product will sell for $2,499. Royal’s Software will receive $1,250 on each unit sold. It is projected that Pursuit Solutions will sell 250 units by month six. It is projected that Royal’s Software will gross $313,000 from sales the first year.
A critical component of software sales will be tech support and product modifications. Royal’s Software projects $63,200 in product modification by the end of six months.
In addition, Royal’s Software has entered into a business agreement with Pursuit Solutions and Johnson and Roe (CPA firm) to create a MAS 90 portable data collection interface that will be sold to accounting firms. The software product has been in development over the past ten months.
John Royal and Dan Whiteaker have been an integral part of the product development. MAS 90 is not a packaged product, rather it is bundled with software customization services ($2,000-$3,000) that will be performed by Royal’s Software. This software product will sell for $2,500.
Royal’s Software will receive 1/3 of gross sales ($833). It is projected that Royal’s Software will gross $500,500 by May of next year from product sales and customization services.
The two co-owners of Royal’s Software, John Royal and Dan Whiteaker, will each invest $50,000. In addition, the company will obtain a $100,000 short-term loan.
The objectives of Royal’s Software are as follows:
- Establish the company as a leader in inventory software products.
- Increase sales by 20% each year.
- Develop one new inventory product per year.
The mission of Royal’s Software is to create inexpensive inventory software that will be scalable, so customer modification can be easily added.
1.3 Keys to Success
The ability to produce products on time and on budget, that meet the user’s needs and specifications.