Harvard Business Review

JULY 2, 2014

It’s a simple calculation to determine how many units must be sold at a given price to cover one’s fixed costs. Assume she must incur a fixed cost of $25,500 to produce and sell a kite. What if we want to make an investment and increase the fixed costs? That’s the breakeven point.

Variable Costs 18

Variable Costs Fixed Costs Sales Sales 18

Harvard Business Review

JUNE 22, 2015

Marketers often have to make the call on whether a certain marketing investment is worth the cost. Can you justify the price tag of the ad you want to buy or the marketing campaign you’re hoping to launch next quarter? The variable costs to make each pair of flip flops are $14.00. First, look at fixed costs.

Variable Costs 15

Variable Costs Fixed Costs Advertising ROI 15

AIHR

JUNE 1, 2021

– Revenue, profit, market share. – Variable or fixed cost. – Direct or indirect cost. – Cost per unit. – Employee cost or FTE. Intangible outcomes. – Production or uptime. – Number of sent invoices. – Number of new customers or leads. – Retention.

ROI 52

ROI Implementation Retention Employee Engagement 52

Harvard Business Review

OCTOBER 29, 2015

Size is perhaps the most neglected marketing tool. On a search of EBSCO’s Business Source Complete , I counted no less than 1,890 articles published in marketing journals in the past 10 years about price, but only 22 addressing package or service size issues. The New Tools of Marketing. Insight Center. drink at $4.75.

Fixed Costs 14

Fixed Costs Variable Costs Marketing Sales 14

Harvard Business Review

MARCH 28, 2011

Companies keep costs down by building supply chains that generate economies of scale. That was effective when companies made products in their home markets using locally produced components. Variabilizing costs. Companies can lower their fixed costs and increase those that fluctuate with the market.

Fixed Costs 15

Fixed Costs Scaling Marketing Manager 15

Harvard Business Review

AUGUST 11, 2011

When stock markets gyrate and growth prospects darken, it's tempting to rein in innovation programs and hoard cash. Management has made promises to senior executives about what a project will achieve, and fixed costs have built up because they looked prudent in comparison to planned revenues.

Fixed Costs 15

Fixed Costs Travel Revenue Assets 15

Harvard Business Review

JULY 2, 2014

It’s a simple calculation to determine how many units must be sold at a given price to cover one’s fixed costs. Assume she must incur a fixed cost of $25,500 to produce and sell a kite. What if we want to make an investment and increase the fixed costs? That’s the breakeven point.

Variable Costs 10

Variable Costs Fixed Costs Sales Sales 10

Harvard Business Review

DECEMBER 21, 2011

Early in my career I was fortunate to help a large manufacturer and distributor of construction and agricultural equipment change the way it went to market in North America. Within the first year of our effort net sales increased 27 percent while fixed costs were reduced by 40 percent. Not all fixed cost reductions were people.

Fixed Costs 16

Fixed Costs Staffing Sales Sales 16

Harvard Business Review

JULY 22, 2011

To appreciate the truth of this claim, it's vital to understand one of Clayton Christensen's theories on marketing and product development: Jobs-to-be-done. It was in your home, had no shelf space limiting its inventory, and could beat Tower on price because of its lower fixed costs.

Fixed Costs 19

Fixed Costs Media Marketing 19

Harvard Business Review

AUGUST 17, 2012

It has doubled its market cap in the five years and sales reached almost $1.5 What's more, these are markets that traditional developed market firms are increasingly targeting for their own growth goals. and other traditionally developed markets. and other traditionally developed markets.

Fixed Costs 15

Fixed Costs Marketing Sales Sales 15

Harvard Business Review

MAY 8, 2012

Skype , for example, competes with fixed-line carriers by offering free mobile Skype calls. Google has its own contender in the market, Google Voice. Bharti's innovative business model converted fixed costs in capital expenditure to a variable cost based on usage of capacity. The trend is spreading.

Balance Sheet 13

Balance Sheet Variable Costs Telecommunications Fixed Costs 13

Harvard Business Review

JULY 20, 2011

A succession of CEOs prior to Rick Wagoner (who fought heroically to overcome the dreadful hand he was dealt) allowed all manner of legacy costs to build up (retiree health, Jobs Bank, etc.) and those largely fixed costs were more painful and debilitating if GM shrank in the U.S. market: small and mid-car. And in the U.S.

Fixed Costs 15

Fixed Costs Banking Advertising Marketing 15

Harvard Business Review

MARCH 16, 2017

But how does the presence of climate skeptics affect the market for climate-related innovation? A drug company must incur a large fixed cost to do the basic research, so it has strong incentives to predict what the demand for the drug will be if its research succeeds. Suppose that there was only one bald man in the world.

Real Estate 13

Real Estate Fixed Costs Marketing Benefits 13

Harvard Business Review

MAY 19, 2015

That gave it a steadier cash flow to cover the costs of its large fixed cost investments, but did not eliminate the unused capacity of plants dedicated to one kind of product. These regional production centers would reduce transportation costs and currency risks, while developing closer ties to their customers.

Cash Flow 15

Cash Flow Engineering Fixed Costs Sales 15

Harvard Business Review

OCTOBER 6, 2014

In the last three years, these two companies have rapidly gained share and now account for more than 8% of the market, while Tesco has lost more than 2% share, down to 28%. The hard discount format accounts for as much as 40% of the German market, and for some good reasons. and spends it in international markets. billion to $8.6

Reorganization 15

Reorganization Fixed Costs Transportation Sales 15

Harvard Business Review

SEPTEMBER 9, 2015

During an economic crisis, the exaggerated decline in orders can be especially damaging to upstream suppliers that have high fixed costs tied to production assets. It reached a peak on June 12 and then proceeded to lose over 40% of its value by the end of August despite efforts by the Chinese government to prop up the market.

Sales 15

Sales Sales Operations Fixed Costs 15

Harvard Business Review

MAY 9, 2013

In every part of the industry, the open innovation model is changing the economics of advertising by switching significant fixed costs to variable costs and sourcing creative from more relevant and, many times, lower cost sources. Advertising Innovation Marketing'

Advertising 14

Advertising Variable Costs Media Fixed Costs 14

Harvard Business Review

OCTOBER 27, 2016

A full-time job provided the steady income needed to support our traditional version of the American Dream: the highly leveraged, high-fixed-cost house; the cars; the latest consumer goods. If you had a full-time job, you won. All of that is changing.

Insurance 14

Insurance Reorganization Fixed Costs Benefits 14

Harvard Business Review

FEBRUARY 6, 2018

Consider its decision to pursue the market for pharmaceutical distribution, or the recent announcement that it will be teaming up with Berkshire Hathaway and JP Morgan Chase to create joint solutions for reducing the health care spending of more than 1 million employees and their families. .”

Hospitality 16

Hospitality Operations Insurance Fixed Costs 16

Harvard Business Review

DECEMBER 17, 2014

Eden McCallum, thus, manages to keep its overhead and other fixed costs at a minimum. The only thing the consultants (usually ex-McKinsey, Bain, or BCG) are responsible for is to execute these projects to the best of their abilities. Could an approach like theirs work in other industries?

Fixed Costs 15

Fixed Costs Retention Manager Marketing 15

Harvard Business Review

SEPTEMBER 4, 2013

For example, a decade ago, it''s unlikely that small-business owners would have told you that they needed a flexible way to host data and applications, one that preferably turned the fixed cost of computer hardware into a variable cost of renting capacity. When the company rides an enabling trend.

Fixed Costs 8

Fixed Costs Variable Costs Assets Banking 8

Harvard Business Review

SEPTEMBER 18, 2013

These businesses have powerful disruptive potential because they can provide consulting at a fraction of the cost of traditional models, largely because they do not need to carry expensive fixed costs like recruiting, training, consultant “beach” time, and expensive real estate.

Real Estate 12

Real Estate Small Business Fixed Costs Recruitment 12

Harvard Business Review

JULY 12, 2018

A second important deficiency arises from the fallacy that a cost-plus price is guaranteed to cover costs. Cost-plus prices provide no guarantee of covering costs or earning a profit. If the major competitors in a market use cost-plus pricing, it stabilizes price levels.

Fixed Costs 12

Fixed Costs Transportation Implementation Marketing 12

Harvard Business Review

OCTOBER 13, 2015

These include the widespread adoption of health plans like Silver plans on state exchanges that require subscribers to share at least 30% of the costs up to a specified limit and the introduction of technology to allow consumers to make informed decisions such as Castlight Health’s price-transparency tools. Insight Center.

Insurance 15

Insurance Administration Reorganization Implementation 15

Harvard Business Review

JUNE 4, 2015

Since theme parks are high fixed cost/low variable cost entities, revenue from discount-enticed new customers is virtually all profit… free money. Restaurants, for example, often charge “market price” for seafood entrees to reflect varying supply conditions. This would result in growth. I think so.

Variable Costs 12

Variable Costs Fixed Costs Implementation Travel 12

Harvard Business Review

AUGUST 8, 2014

So to cover his monthly fixed costs of student loan payments (on more than $100k in debt), rent, and health care he was driving for Uber. As a result he was now competing against much more experienced people for each new gig that came up, and he hadn’t had a lot of success since graduating.

Fixed Costs 14

Fixed Costs Project Management Education Accounts 14

Harvard Business Review

MARCH 28, 2014

Disruption is an explanation of how small nimble companies unseat industry giants – but it is simultaneously a story of market expansion and the provision of ever cheaper and more accessible goods and services. Virtual reality is not a disruption to the computing market, instead it stands poised to disrupt content consumption.

Fixed Costs 9

Fixed Costs Software Transportation Scaling 9

Harvard Business Review

FEBRUARY 24, 2015

The first category is exogenous factors over which the business has little control: the growth of the markets into which it sells; the competitive intensity and thus the average profitability of the industry in which it operates; or the fragmentation of its industry and thus the scope for a growth-by-acquisition approach.

Assets 11

Assets Revenue Energy Fixed Costs 11

Harvard Business Review

MAY 28, 2018

He asked one former major investor for a reaction to the company’s prediction (accompanying poor quarterly results): “that the [current] market contraction will bottom out soon and our profits will improve.” I assumed you had some further cost reduction up your sleeve.” What he heard was uncomfortable.

Balance Sheet 12

Balance Sheet Cash Flow Banking Fixed Costs 12

Harvard Business Review

AUGUST 31, 2018

has slowed , and that in most industries the biggest firms have higher market share than they did a decade ago. By cutting the fixed costs of computing — avoiding the need to hire IT staff, servers, and hardware — even the smallest firm can satisfy large and unexpected computing needs. businesses.

Scaling 14

Scaling Fixed Costs Software Education 14

Harvard Business Review

NOVEMBER 10, 2016

By tapping into that excess capacity and making it available on a network they generated new market demand, which led to UberX and a thriving community of 160,000 drivers conducting one million rides a day. On any given day in America, 40% of hospital beds lie empty, their enormous fixed costs weighing heavily on the system.

Hospitality 12

Hospitality Administration Transportation Fixed Costs 12

Harvard Business Review

APRIL 6, 2016

A company sets up a joint venture with a partner that has complementary assets and capabilities, in order to limit up-front investments, speed up market entry, and reduce risk. But on the other hand, in order to safeguard the company’s future competitiveness, CEOs may have no other choice than to invest now.

Assets 12

Assets Operations Insurance Telecommunications 12

Harvard Business Review

DECEMBER 1, 2017

You have to consider salaries, marketing budget, office size, technology services, and on and on. Too often, assumptions about the potential market and its clients can cloud our judgement about expenses. In fact, he began to notice that prospects would react negatively to the extravagance of his office, décor, and furnishings.

Revenue 11

Revenue Fixed Costs Staffing Accounts 11

Harvard Business Review

NOVEMBER 18, 2013

For instance, larger scale has enabled many hospital systems to lower their per-patient operating costs significantly. However, reform and other market changes are altering the scale equation for hospital systems, so some of the traditional advantages that larger scale has traditionally brought them may no longer apply.

Hospitality 9

Hospitality Scaling Revenue Fixed Costs 9

Harvard Business Review

APRIL 5, 2017

However, firms can efficiently increase margin growth without much revenue growth by managing to squeeze out their fixed costs to service the same level of output. What if concentrated market power of a few companies in an industry has made these companies more profitable than usual? Are all share repurchases myopic?

Metrics 11

Metrics Cash Flow Revenue Compensation 11

Harvard Business Review

DECEMBER 25, 2013

Further, sales variation can get widened much more when it comes to financial variation because of fixed costs. Along the same lines, a 5% drop in revenue can result in a 50% drop in market cap. It is not uncommon for a 5% drop in revenue to result in a 30% drop in profitability.

Fixed Costs 9

Fixed Costs Sales Sales Revenue 9

Harvard Business Review

JULY 27, 2017

And the fixed cost from “touchpoint-to-pilot” are immense. For example, in the case of a $100 million CVC fund, which can close five to 10 investments a year, these costs typically range from $1 to $2 million per startup — not including the administrative and variable costs of the pilot itself.

Fixed Costs 8

Fixed Costs Variable Costs Administration Media 8