# Profit simulation

## Business plan

Let's take a look at the business plan, valuation, and profit simulation of the quantum cryptographic device manufacturing and sales business by following the steps below.

## **Quantum Cryptography Device Manufacturing and Sales Business Plan and Valuation, Revenue Simulation**

**Assumptions:**

* Manufacturing cost is 10% of the selling price.
* Selling price is $20 USD.

**Sales Strategy:**

* Implement a paid guarantee service via subscription. The subscription fee is $3 per month.
* Subscription registration rate is 50%.
* Monthly churn rate is 10%.

**Sales Plan:**

* For the first three months, conduct a free campaign by distributing devices for free to promote subscription sales. Therefore, produce 500,000 devices for free distribution during these three months.
* Subscription registration rate during the campaign is 50%.
* Monthly churn rate is 10%.
* Sell 600,000 devices in the first year.
* Plan to sell 1,200,000 devices per year from the second year onwards.

**Initial Development Costs:**

* Initial development cost for mass production is $2M USD.
* Development period is 6 months.
* Operating cost is ¥35M per month.
* Device sales will start from the 7th month.
* Sales and marketing expenses are 30% of subscription sales revenue.

### **Revenue Simulation:**

#### **First Year Revenue Simulation:**

1. **Device Sales Revenue:**
   * Selling price per device: $20
   * Number of devices sold: 600,000
   * Revenue from device sales: $12,000,000
2. **Subscription Revenue:**
   * Subscription fee per month: $3
   * Number of subscriptions in the first month: 50% of 500,000 (250,000)
   * Monthly churn rate: 10%
   * Average number of subscriptions per month:

     $$
     \text{Average subscriptions} = 250,000 \times (1 - 0.10) + 250,000 \times (1 - 0.10)^2 + \ldots + 250,000 \times (1 - 0.10)^6
     $$

     $$
     \text{Average subscriptions} = 250,000 \times \frac{1 - (1 - 0.10)^6}{0.10} = 250,000 \times \frac{1 - 0.531441}{0.10} = 250,000 \times 4.68416 = 1,171,040
     $$
   * Total subscription revenue for the first year:

     $$
     \text{Total subscription revenue} = 1,171,040 \times 3 \times 12 = $42,187,200
     $$
3. **Total Revenue:**
   * Total revenue for the first year: $12,000,000 (device sales) + $42,187,200 (subscription) = $54,187,200

#### **Second Year Revenue Simulation:**

1. **Device Sales Revenue:**
   * Selling price per device: $20
   * Number of devices sold: 1,200,000
   * Revenue from device sales: $24,000,000
2. **Subscription Revenue:**
   * Subscription fee per month: $3
   * Number of subscriptions in the first month: 50% of 1,200,000 (600,000)
   * Monthly churn rate: 10%
   * Average number of subscriptions per month:

     $$
     \text{Average subscriptions} = 600,000 \times (1 - 0.10) + 600,000 \times (1 - 0.10)^2 + \ldots + 600,000 \times (1 - 0.10)^6
     $$

     $$
     \text{Average subscriptions} = 600,000 \times \frac{1 - (1 - 0.10)^6}{0.10} = 600,000 \times \frac{1 - 0.531441}{0.10} = 600,000 \times 4.68416 = 2,810,896
     $$
   * Total subscription revenue for the second year:

     $$
     \text{Total subscription revenue} = 2,810,896 \times 3 \times 12 = $101,102,752
     $$
3. **Total Revenue:**
   * Total revenue for the second year: $24,000,000 (device sales) + $101,102,752 (subscription) = $125,102,752

### Simple evaluation of the above**:**

1. **Initial Development Costs:**
   * Initial development cost for mass production: $2M USD
2. **Operating Costs:**
   * Operating cost per month: ¥35M
   * Operating cost per year: ¥35M \* 12 = ¥420M
3. **Sales and Marketing Expenses:**
   * Sales and marketing expenses as a percentage of subscription revenue: 30%
   * Sales and marketing expenses for the first year: $42,187,200 \* 0.30 = $12,656,160
   * Sales and marketing expenses for the second year: $101,102,752 \* 0.30 = $30,330,825
4. **Net Profit:**
   * Net profit for the first year: $54,187,200 (total revenue) - $420M (operating costs) - $12,656,160 (sales and marketing expenses) = $41,111,040
   * Net profit for the second year: $125,102,752 (total revenue) - $420M (operating costs) - $30,330,825 (sales and marketing expenses) = $94,351,927

## **Conclusion:**

The quantum cryptography device manufacturing and sales business plan outlines a robust strategy for generating revenue through both device sales and subscription services. The initial development costs and operating expenses are significant, but the projected revenue and net profit indicate a promising financial future for the business. The subscription model provides a steady stream of revenue, and the free campaign in the first three months is expected to boost subscription registrations. 

\*The warranty service included in the paid subscription service guarantees 100% protection of the data stored by the customer. This is nothing but proof that our technology is genuine.