ProductionPrice VS Cost

The Reasons why Production Cost is a Constant.

Matumit SombunjaroenV1.0 10APR2015

Let’s start with Pretext

“Production Cost is a Constant”

The contents of this slide will give reasons

and guide readers toward the said conclusion.

Final End Product

The rest of the slides will assume that

The End Product is fixed,

And the production is processed

to obtain the same result

Case Study

Although the concept is applicable to most goods and services.

Anime will be use as a case study for the sake of consistency.

Definitions

Definition of Price

Price, is a quantitative worth of a product,

Defined by currency based numerical value

that the buyer and seller agreed to use

in the trading of the item.

I’m 7000Yen

I’m SO HYPED for this!!!

Definition of Value

I don’t get what’s so interesting about it?

Value, is an importance worth of a product,

Defined by the needs and wants of the Client

High Value here Low Value

Production Cost

Is the total Worth that need to be used

to create the Product

100,000,000 Yen 7,000 Yen

Production Assets

Production Cost is made up fromCombinations of Assets.

Cost do not simply equate to Money Spent

ProductionCost

Money

Time

Skill

Heart

And Yes, Heart is an Asset

Explanation on thiswill be made later on

Skill as an Asset

Occurred Problems

There were numerous occasions when a Client,or a person with high authority, ordered a production

person to do things that are totally unreasonable.

Absurd commentsmade by Clients

Some Examples

If you don’t understand why these are absurd,

You are likely to cause headaches to

Production People even if you have no intention to do so.

Printed Material - “This is not the same Color I saw on my screen”

3DAnimation – “This movement is great, but can you make him a bit taller?”

Web Brochure – “This layout is perfect, could you make the font a bit bigger?”

The Cause

It’s usually becausethose people do not have the knowledge

regarding the production process.

Simply speaking,

The Thing is

It is the duty of PRto make customers understand production process

and prevent these kind of things to happen.

If A Client said things like that,

It’s totally reasonable

HOWEVER

If it’s a thing along these lines,

Then it’s a totally serious matter

“2 Months!? I don’t care! Just deliver this next week!”

“A million!? This is stupid, I’ll pay 5k for this”

“Even if it’s cheap, I demand a quality work!”

The Agenda

Cheap, Fast, and High Quality

Is the Ultimate goal for a product

that any Client would seek

Cheap Fast

High Quality

The Ultimate Ideal

And

For Marketing reason,

Some Clients and Managers

are also likely to demand these

Just Do as I said

However

To explain thing easily,

It is logically impossible to obtain all 3!

Cheap Fast

High Quality

Here is the reason

As long as time is an infinite variable,

If someone can practically created something,

It is also possible for someone else

to create the same product

100 Yrs?

ProductionTime

Even when End Product is the same

A Creator with Higher Skill can

Use less time to complete the work

of the same quality

100 Yrs?

ProductionTime

Reduced Time

Or

If the available time is equivalent

A Creator with higher Skill

can produce a higher Quality Work

MEANING

Skill Have its own Price!

And money were spent to obtain it

Summary

Price

Low QualityLong

Production Time

HighQuality

ShortProduction

Time

Low Quality

ShortProduction

Time

HighQuality

Long Production

Time

Summary

Pro

duction C

ost

Deficiency Cost fromLow Quality

HighQuality

Assets spent to achieve

High Quality

Assets

Time

Time

Assets spent to hasten Production

Time

Assets

LowQuality

Examples of Deficiency Cost

Customer’s lack of interest due toProduct’s Low Value

Schedule DelaysDue to Lack of Skills

Schedule DelaysDue to Outdated Tools

Low MoraleDue to various issues

Heartas an Asset

The Root of the problem

If a person do not know about the production,

They are likely associate

the price range with the end product

100,000,000 Yen 7,000 Yen

Make this with100k Budget

As such,

Something like this happened

The Result,

It will cause great stress on the Production People

As they are not paid appropriately

for the work that they have done

I’m not going to work anymore

The reason,

In Exchange for a Cheaper Price,

NEGATIVE EMOTION got stacked on

as a Deficiency Cost instead

Pro

duction C

ost

Assets

NEGATIVEEMOTION

PR

ICE

In the case of Outsource Work

Something like this can happen

OutsourceFirm

Client

I demand[Something outrageous]

….Fine…

Sometime Later

We really need helpon this!

Go find someone else

As a side Bonus

Production People in the same line of work,

Will also shunned away from the same client as well

OutsourceFirm

Client

That Client told us to [Absurdity]

We really need helpon this!

AnotherOutsource

Firm

We are sorry,But you have a really

bad reputation in the business

On the Positive Side,

It is possible to obtain Low Price

From Positive Heart Factors

Pro

duction C

ost

Assets

POSITIVEEMOTION

PR

ICE

Hey, I WANT to work on this!I don’t mind a Cheap pay!

We are friends aren’t we?I’ll help you on it

You really helped us that time,Here’s a discount

As an Example,

Crowd Funding work on the principle of

Utilizing Target Audience’s desire to obtain a Product

The Funding Obtained became part of Production Cost

Self Funding

Crowd Funding

Self Funding

Assets spentto obtain

Crowd Funding

However,

It should be noted that Positive Heart Factors

Is not a cheaply obtainable Asset

And YES, There are stupid people like the one above

I know that you will have to spent times and might go broke,But help me on this,

You just need to have a Heart in this!!!

If you can’t pay the Price,Stop wasting my time

Tools as an Asset

As an example

Let say that the Management decided to invest on a new Software that can shorten work time

Done in 2Hrs

OldSoftware

NewSoftware

Done in 1Hrs

The Result

Even if the New Software is more effective.

Other factors need to be spent to obtain

the shortened Production Time

Research new Software Time

OldSoftware

NewSoftware

Purchase Time and Money

Learning and Practice TimeProduction

Cost

And Yes,

Upgrade tools will give better benefit in the Long Run,

But the need for continual updates

Will also likely come in the future

NewSoftware

Current Project Next Project

OldSoftware

Deficiency Factors

To Summarize all things

Even if the Production Price got changed,

They simply got replaced by other factors,

As such, To achieve the same End Product

Total Production Cost remain a constant

In Another word

“You cannot gain anything

without sacrificing something else in return”