Some Q3 revenue maximization thoughtsHello fellow Verde shareholders,
Kanerfalk's recent post considered what the March - June Q3 2021 sales numbers might be and he noted the likely use of discounts to the web page retail pricing as a way to secure new customers. I would like to offer a follow-on thought as we work our way through the July - September Q3 2021, the peak demand season for the Verde products.
As you know, Q3 2020 saw sales of 105,769 tonnes. We also know that the 2021 Q1 tonnes sold were up 63% over Q1 2020. A similar increase in Q3 would take sales to 172,403. The only problem with this projection is that the current monthly production from Plant 1 is capped at 50,000 tonnes, so the maximum production in Q3 cannot exceed 150,000 tonnes.
If you are facing customer demand in Q3 that would reach 170,000 tonnes, it would be possible to reduce this total demand by gradually raising the pricing of the product to end users, which will gradually reduce the demand each month to the 50,000 tonnes which the Company can actually deliver.
As we have seen over the last 4 weeks in July, Verde's prices have been gradually increasing, almost on a weekly basis. This to me looks and feels very much like the demand dampening strategy I have set out above. If this is the case, it would suggest that sales through July will max out at 50,000 tonnes (and likely will be 50,000 in August and September) but will do so at full retail prices. You do not need to discount to make sales during a time where you can sell everything you can produce at the higher regular prices.
So, with a reasonable expectation that Q2 sales figures will be outstanding (even on a heavily discounted basis to capture volume), the Q3 numbers can reasonably predicted to be around 150,000 tonnes (a 42% increase over 2020) and at the highest per tonne retail prices we have ever seen. A quarterly sales figure of above $15,000,000 in Q3 2021 is well within reach. Given our 2020 total annual sales were $9,167,000, this level of quarterly sales is a major accomplishment and starts to frame the long term potential of the Company.
Cheers,
S.