Production facility & equipment lease rates

[rebelo]

Does anybody out there here in this forum have some idea as to what a fair and equitable lease rate for a production facility and its equipment would be in terms of percentage of gross sales or gross profit, or some other determinant?

What I am looking at is not a contract situation, but one in which I would be making the product myself in someone else's facility using their equipment, space, utilities, storage, etc.

Sharing overhead costs as a percentage of total production, his and mine, would not be feasible as the overhead for this particular facility is so low that the owner of the facility would not find it worthwhile, even were we to include a significant markup on the overhead...

Any and all ideas would be significantly appreciated as this is a very good opportunity for me and the guy that I am in discussions with...

I am waiting with baited breath as I have confidence in the senior members of this forum and anticipate some great input!

Thanks in advance.

- John

[Michael Murphy]

John, Ive done this before, usually I worked it out with the owners, you may want to find a brewery who is suffering from a bad brewmaster, this will always perk their interest in getting new blood into the brewery.

I have also found its hard to make money doing this, usually the owners what too much per brew. I have done it at 2 differnet breweries, the first which was Idea, at first it was 350 euro per batch start to packaging, not including materials or tax. after a while it was given to me to make them 4 batches per month for them. this worked out well, I supplied 2 pubs with keg beer while making the 4 batches for the said brewery, once I needed a brewery with a licence to sell in bottles (italian BS laws) and they wanted 1200 euro for a 10hl batch, including only base malt. The second didnt work out, but it was a nice casper shulz brewery. Every one has different needs so if you can work them out, you may find yourself a sweet deal. If your looking into a long term situation, you would have to have contracts and what not, this isnt feesable for a small production IMO, if you are able to sell 1000's of hl then go for it.

you would need a buisness plan for sales and deduce how much you can spen per bottle or keg, then dirive a budget from there, you cant pay a brewery 1.00 per liter if you cant sell it for 3.00, it wouldnt be worth the trouble.


Also if you do manage to get one, remember sH*T happens, and they usually wnat the money anyway.