Production Price VS Cost

1. Production
Price VS Cost
The Reasons why Production Cost is a Constant.
Matumit Sombunjaroen
V1.0 10APR2015

2. 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.

3. 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

4. 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.

5. Definitions

6. 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

7. 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

8. Production Cost
Is the total Worth that need to be used
to create the Product
100,000,000 Yen 7,000 Yen

9. Production Assets
Production Cost is made up from
Combinations of Assets.
Cost do not simply equate to Money Spent
Production
Cost
Money
Time
Skill
Heart

10. And Yes, Heart is an Asset
Explanation on this
will be made later on

11. Skill as an Asset

12. 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 comments
made by Clients

13. 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?”

14. The Cause
It’s usually because
those people do not have the knowledge
regarding the production process.
Simply speaking,

15. The Thing is
It is the duty of PR
to make customers understand production process
and prevent these kind of things to happen.
If A Client said things like that,
It’s totally reasonable

16. HOWEVER

17. 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!”

18. 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

19. And
For Marketing reason,
Some Clients and Managers
are also likely to demand these
Just Do as I said

20. However
To explain thing easily,
It is logically impossible to obtain all 3!
Cheap Fast
High
Quality

21. 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?
Production
Time

22. 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?
Production
Time
Reduced Time

23. Or
If the available time is equivalent
A Creator with higher Skill
can produce a higher Quality Work

24. MEANING
Skill Have its own Price!
And money were spent to obtain it

25. Summary
Price
Low Quality
Long
Production
Time
High
Quality
Short
Production
Time
Low Quality
Short
Production
Time
High
Quality
Long
Production
Time

26. Summary
ProductionCost Deficiency
Cost from
Low Quality
High
Quality
Assets spent
to achieve
High Quality
Assets
Time
Time
Assets spent
to hasten
Production
Time
Assets
Low
Quality

27. Examples of Deficiency Cost
Customer’s lack of interest due to
Product’s Low Value
Schedule Delays
Due to Lack of Skills
Schedule Delays
Due to Outdated Tools
Low Morale
Due to various issues

28. Heart
as an Asset

29. 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

30. Make this with
100k Budget
As such,
Something like this happened

31. 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

32. The reason,
In Exchange for a Cheaper Price,
NEGATIVE EMOTION got stacked on
as a Deficiency Cost instead
ProductionCost Assets
NEGATIVE
EMOTION
PRICE

33. In the case of Outsource Work
Something like this can happen
Outsource
Firm
Client
I demand
[Something outrageous]
….Fine…
Sometime Later
We really need help
on this!
Go find someone else

34. As a side Bonus
Production People in the same line of work,
Will also shunned away from the same client as well
Outsource
Firm
Client
That Client told us to [Absurdity]
We really need help
on this!
Another
Outsource
Firm
We are sorry,
But you have a really
bad reputation in the business

35. On the Positive Side,
It is possible to obtain Low Price
From Positive Heart Factors
ProductionCost
Assets
POSITIVE
EMOTION
PRICE
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

36. 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 spent
to obtain
Crowd Funding

37. 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

38. Tools as an Asset

39. As an example
Let say that the Management decided to invest on a
new Software that can shorten work time
Done in 2Hrs
Old
Software
New
Software
Done in 1Hrs

40. 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
Old
Software
New
Software
Purchase Time and Money
Learning and Practice Time
Production
Cost

41. 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
New
Software
Current Project Next Project
Old
Software
Deficiency Factors

42. 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

43. In Another word
“You cannot gain anything
without sacrificing something else in return”