Space and Light Solutions

Space and Light Studios – Cost – Volume – Profit Analysis and the Business of Yoga

Zara Qureshi

The main crux of the Space and Light Studios (SLS) business is the need to differentiate in a growing, competitive market. The owners of the company are facing key profitability issues and are unable to minimize costs while maximizing profits. They are also facing issues with their costs of operations and are uncertain about the prices they should charge for the range of different yoga classes they have on offer. There are a few key drivers behind these challenges facing SLS: 1) the first is the growing competition in the market given the growing popularity of yoga as an exercise form in Singapore and 2) the incredibly high product mix SLS has on offer which might be driving their costs high and cannibalizing their own product margins from their main yoga classes on offer.

In order to figure out how to solve the high cost, low profitability situation, SLS would need to conduct a historical analysis of sales of class sizes, class types and typical times during which classes were sold. This would help identify the high margin classes and allow SLS to focus on those and trim the extra classes driving up growth. Secondly, SLS would need to do a competitive analysis to benchmark its services against its competitors and figure out its niche market. SLS’ yoga classes are fundamental to its business but perhaps the Salt sessions are another niche market SLS could focus on going forward. Primarily, SLS has stretched itself too thin and conduct financial analysis to quantify its growth capabilities will help it narrow down the core of its profitability issues.