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<body text="#000000" bgcolor="#FFFFFF">Dear David <div><br></div><div>Typical worker wages in many poor countries are $200-300 a month. Informal sector pays less. Industrial production would make a single pot metal stove in 8-10 minutes including boxing. <br>
<br>Labour is thus an insignificant cost, it is material that is the major expense. </div><div><br></div><div>In volume you can assume materials to be about 2/3 the marginal cost of production and the retail price to be between 2 and 6 times the marginal cost. Labour-intensive production can be very good if they have exactly the right tools (which is often not the case.).</div>
<div><br></div><div>Anything you buy in North America at a store sells for about 10 times the marginal production cost, just to give you an idea what consumer societies pay.</div><div><br></div><div>Regards </div><div>Crispin </div>
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I notices a post here, where a facility employing 6-10 people coulf
produce 500 stoves per month. This means that each person can
produce 50-80 stoves per month. Assuming a 40 hour work week (which
may be too low), that means 170 hours per month or 2-3.5 hours per
stove. Assuming normal G&A expense, (things like cost of the
building and tools) and some component cost for the stove (sheet
metal costs money), would the stove not cost over 2-3.5 hours of a
worker's time? What does this say about the cost of a stove?<br>
<br>
If a stove must sell for $X, does this imply the worker's income
must be well below $X/2 per hour since there are G&A and
material costs involved?<br>
<br>
If my analysis is incorrect, please tell me how the business can
survive with less income than expenses. Can the worker survive with
less income than it costs him to survive?<br>
<br>
Dave 8{)
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