Pricing a Student Data-Entry Service Without Ignoring Costs
Four Class 12 students plan a summer data-entry and typing service for nearby shopkeepers. They have two working desktop computers, one borrowed printer, and a room in a student's house. Fixed monthly costs are: electricity ₹700, internet ₹600, printing paper and ink ₹500, and repair reserve ₹400. They value the computers' use at ₹1,000 per month as depreciation. They plan to charge ₹60 per 1,000 words typed. A nearby cyber café charges ₹80 per 1,000 words. From a trial, one student can type and proofread 1,000 words of simple shop records in 20 minutes; with two students working, output is about 3,000 words per hour, but school exams leave only 2 hours per day for 20 days in the month. They also need to maintain cash receipts, a job register and backup of files. One shopkeeper offers ₹45 per 1,000 words for 50,000 words if paid in cash without receipt.
1. Calculate the monthly fixed cost, the break-even word volume at ₹60 per 1,000 words, and whether their available capacity can reach break-even.
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Fixed monthly cost = electricity 700 + internet 600 + printing 500 + repair reserve 400 + depreciation 1,000 = ₹3,200. At ₹60 per 1,000 words, break-even words = (3,200 ÷ 60) × 1,000 = 53,333 words, about 54,000 words. Capacity = 2 hours/day × 20 days = 40 hours; at 3,000 words/hour = 120,000 words. Break-even uses 53,333 ÷ 120,000 = 44.4% of capacity, about 17.8 hours. So the plan is feasible only if they actually get about 54,000 words of paid work. The ₹45 offer for 50,000 words gives ₹2,250, which is below the ₹3,200 fixed cost and below break-even. It would use 16.7 hours, leaving little time for better-paying work. They should not treat ₹2,250 as profit; it is a contribution that does not cover the month.
2. Should the team accept the ₹45 cash-without-receipt offer? Give a reasoned decision and a counter-offer.
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Decision: do not accept the ₹45 cash-no-receipt offer as it stands. Reasons: it is below break-even for the month, it sets a low price that other shopkeepers will cite, and no receipt weakens the job register and cash control. If the team has idle capacity after covering fixed costs, a marginal job can still help, but only if it does not displace ₹60 work and if the true extra cost is near zero. Better counter-offer: ₹55 per 1,000 words with a receipt, or ₹2,750 for 50,000 words, with 50% advance and delivery in two parts. If the shopkeeper refuses any receipt, decline: cash without record creates a dispute risk and teaches poor business practice. A written estimate and receipt protect both sides. The team should calculate the offer against capacity and fixed costs, not just compare ₹45 with ₹80.
3. What records and backup practices should the team maintain, and why are they needed for the practical/viva?
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Records: a job register with date, customer, word count, rate, amount, advance, balance, delivery date and proofreader; cash receipts in duplicate; a daily cash book; an invoice/estimate book; a backup log. Give the customer a receipt even for cash. Reconcile cash at the end of each working day and have two students count it. Backup: keep the working folder on the computer and a second copy on a pen drive or free cloud folder; name files as customer_date_job; never overwrite the only copy; check that the backup opens. Protect customer data: do not share shop records or phone numbers, and delete files after delivery only if the customer agrees. For the viva, be ready to show the break-even calculation, the job register and one before/after backup check.