To analyze the total monthly costs and the sales that would have to be generated to cover those costs - I offer the following analysis:

Assuming that each sale order would have an average value of $25,000 (such as for a container of a product), and applying a 10% credit/commission to the representative office:

- Major Large Cities - $230,000 + $55,000 = $285,000/year. The sales target would be $2,850,000/year. Thus, the office would have to sell at least 114 orders per year (about 10 sales orders per month).

- Medium Sized Cities - $200,000 + $55,000 = $255,000/year. The sales target would be $2,550,000/year. Thus, the office would have to sell at least 102 orders per year (about 9 sales orders per month).

- Industrial Areas - $175,000 + $55,000 = $230,000/year. The sales target would be $2,300,000/year. Thus, the office would have to sell at least 92 orders per year (about 8 orders per month)

- Major Large Cities - $230,000 + $34,000 = $264,000/year. The sales target would be 2,640,000/year. Thus, the office would have to sell at least 106 orders per year (about 9 orders per month).

- Medium Sized Cities - $200,000 + $34,000 = $234,000/year. The sales target would be $2,340,000/year. Thus the office would have to sell at least 94 orders per year (about 8 orders per month).

- Industrial Areas - $175,000 + $34,000 = $209,000/year. The sales target would be $2,090,000/year. Thus, the office would have to sell about 84 orders per year (about 7 orders per month).

For a Distribution Warehouse and Representative Office, the costs would be higher. But, the analysis would be somewhat different.

The fact that the warehouse/distribution facility would be selling a good part of its orders “ex-U.S. warehouse” would factor-in a higher sales price. And, many buyers understand and accept this economic fact - as it is a greater convenience to them.

Thus, working with the assumption that each $25,000 order represents a container-load of product, a factor of 10% can be added into the calculation, as this would represent an additional charge that could then be added to the selling price. Therefore, the sales target total would then be divided by $27,500 to come to the needed number of orders (or container-loads).

Each analysis is for a 5,000 square feet building with offices. The costs include the same as those for the representative office (though with a warehouse worker rather than a sales assistant), and also include other expenses, such as warehouse supplies and utilities (that are typically charged separate from rent) and additional labor costs.

The costs would be approximately:

- Major Large Cities - $280,000/year

- Medium Sized Cities - 245,000/year

- Industrial Areas - $215,000/year.

To these costs, you can apply the same travel expenses, and do the same calculations for container load sales. Thus, to analyze this with the assumption that the warehouse would serve the entire U.S.A., with both sales and distribution, the orders needed to be generated are:

- Major Large Cities - $280,000 + $55,000 = $335,000/year. The sales target would be $3,350,000/year. Thus, the office would have to sell at about 122 container-loads per year (about 10 containers per month).

- Medium Sized Cities - $245,000 + $55,000 = $300,000/year. The sales target would be $3,000,000/year. Thus, the office would have to sell at about 110 container-loads per year (at least 9 containers per month).

- Industrial Areas - $215,000 + $55,000 = $270,000/year. The sales target would be

$2,700,000/year. Thus, the office would have to sell at least 98 container-loads per year (about 8 containers per month)

It is important to note that in each situation, a company has to determine if 10% is an appropriate credit/commission to apply. As the office and warehouse would effectively be extensions of the company's facilities, a company should also credit an additional amount that would be representative of their own overhead costs. Otherwise, the representative office/warehouse will have an unfair burden placed on them.

So, even though I used a 10% credit in this analysis, a company should apply a factor most appropriate to their own situation.

Additionally, in the matter of analyzing the warehouse/distribution facility, I used a 10% price increase. But, here again, a company should apply the market price that would be most appropriate to their own product(s). Thus, the factor can be even greater.

I repeat again that these analyses are approximate, and are representative of the actual costs. Much depends on location within the areas itself, as rents differ even within geographic areas. Also, if the parent company itself does sufficient advertising and promotion, these costs for the representative office can be less or even eliminated.

There are many factors to analyze in the decision on whether to have only a sales office or to also have a warehouse/distribution center. The decision depends on the goals of the company and the benefits that each would have.

For instance, if the goal of the company is to primarily sell large orders with direct shipment to the buyers, and there are marketing benefits to a more centralized location, then a sales office in a major city can achieve that goal.