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

MAY 9, 2013

When one person with a wireless connection can be an agency, a media company, or even a manufacturer, traditional advertising organizations have to change their culture, processes, structure, talent policies, resources, and even their business and revenue models in order to embrace the power of open systems being fueled by digital connectivity.

Advertising 13

Advertising Variable Costs Media Fixed Costs 13

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 12

Balance Sheet Variable Costs Telecommunications Fixed Costs 12

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

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

APRIL 5, 2017

McKinsey’s margin growth measure classified firms that report higher earnings growth than revenue growth as myopic. 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. Are all share repurchases myopic?

Metrics 11

Metrics Cash Flow Revenue Compensation 11

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.

Variable Costs 12

Variable Costs Fixed Costs Implementation Travel 12

Harvard Business Review

JULY 12, 2018

Among pricing experts, cost-plus pricing is reviled for some legitimate reasons. For stand-alone projects in particular, cost-plus pricing discourages efficiency and cost containment. When lower costs are quoted, the company earns lower revenue and total profit. This notion can make managers falsely complacent.

Fixed Costs 12

Fixed Costs Transportation Implementation Marketing 12

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 14

Hospitality Operations Insurance Fixed Costs 14

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

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. Colin was sure his revenues would exceed costs within a year, but the large clients he expected never materialized.

Revenue 9

Revenue Fixed Costs Staffing Accounts 9

Harvard Business Review

MAY 28, 2018

By 2016, the rise of smart phones seemed to have made the company less relevant: Its revenues were at almost the same level they had been a full decade earlier. Commented one: “I’ve seen many transformations, but if the market is shrinking at 10% you really need to cut costs at a faster rate to maintain your margin.

Balance Sheet 11

Balance Sheet Cash Flow Banking Fixed Costs 11

Harvard Business Review

NOVEMBER 10, 2016

AirBnB, now used by 50,000 renters each night, is considered to be directly responsible for an estimated $450 million of lost hotel revenue each year. On any given day in America, 40% of hospital beds lie empty, their enormous fixed costs weighing heavily on the system. Administrative automation.

Hospitality 12

Hospitality Administration Transportation Fixed Costs 12

Harvard Business Review

DECEMBER 25, 2013

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

Fixed Costs 9

Fixed Costs Sales Sales Revenue 9

Harvard Business Review

APRIL 6, 2016

The integrated carrier gets incremental revenues from its excess capacity. For example, Lycamobile, a big mobile VNO, focuses on expatriate communities looking for low-cost international pay-as-you-go calls in 19 countries. The model can be a win-win as long as the two companies address different customer segments.

Assets 12

Assets Operations Insurance Telecommunications 12

Harvard Business Review

NOVEMBER 29, 2013

A fascinating business dynamic will unfold as health care providers in the United States shift from a reimbursement system that has historically paid for procedures performed to one that rewards population health — providing the total care of a community at a fixed cost and improving its members overall health.

Revenue 9

Revenue Nonprofit Operations Hospitality 9

Harvard Business Review

OCTOBER 5, 2017

He finds that the rise in industry concentration – the share of revenue captured by the top firms in a sector – is largely explained by the adoption of IT. “Once a firm ‘invents’ good management it will then grow rapidly and dominate the market,” Bloom argues.

Software 8

Software Fixed Costs Scaling Revenue 8

Harvard Business Review

MARCH 1, 2018

Consequently, if we want new medical innovations to be financially viable for the patients who need it most, health insurance markets need to be regulated to eliminate the perverse financial incentives that limit patients’ coverage. Insurance markets are failing to deliver. First, a little background. Problems may get worse.

Insurance 8

Insurance Marketing Administration Fixed Costs 8

Zenefits

JULY 31, 2022

Some common strategies to start this process include ensuring your pricing is consistent with the current market conditions or increasing efficiency through process improvement. Keep your pricing consistent with current market conditions. If costs rise faster than revenue, you may have a difficult financial situation.

Manager 52

Manager Onboarding Banking Process Improvement 52

AIHR

APRIL 20, 2023

They balance short-term survival with long-term prosperity A study conducted by Harvard studying 4700 public companies across three recession periods confirmed that companies that make generic costs cuts across the board during a downturn are not able to flourish once the market recovers. million cost per year.

Sales 98

Sales Sales Fixed Costs Marketing 98

Harvard Business Review

AUGUST 16, 2011

Secondly, expecting a business to be profitable quickly forces it to keep its fixed costs low. Because a business's cost structure determines which customers it finds profitable, keeping these fixed costs low preserves strategic options for the company when it is choosing which customers to target.

Fixed Costs 22

Fixed Costs Metrics Scaling Marketing 22

Chief Executive

JULY 25, 2022

It’s hard to tell what’s leadership prowess and what’s luck when you’re in a rising market. And if we do that, we can’t help but grow revenues per fixed cost. You’re not 20-mile marching, you’re just more growth big, more growth big. These days you need a little more craft than that.

Balance Sheet 98

Balance Sheet Assets Engineering Operations 98

Harvard Business Review

FEBRUARY 22, 2011

As each of these companies expands its fixed-cost infrastructure, profits grow geometrically because the additional variable cost of adding each new user is near zero. Adding a profile on Facebook has little to no impact on Facebook's operating costs. Greater scale bestows greater competitive advantage.

Advertising 16

Advertising Variable Costs Scaling Media 16

Harvard Business Review

MAY 21, 2015

Over the past two decades, there have been many attempts to reform the electric utility market. Consider how Uber opened up the transportation market. So the company mobilized existing, under-utilized assets and connected them to a sharable revenue stream.

Energy 15

Energy Transportation Real Estate Software 15

Harvard Business Review

JUNE 24, 2013

billion before it had even $20 million in revenues) or YouTube (which was sold 19 months after its founding to Google for close to $2 billion), or other companies whose hyper-growth attracted suitors before a viable business model emerged. How will you generate enough transactions to cover the fixed costs involved in running your business?

Fixed Costs 11

Fixed Costs Revenue Marketing Scaling 11

Harvard Business Review

OCTOBER 7, 2015

market has witnessed a substantial rise of activist investors. is a top performing S&P 500 listed company whose two-year total return outperformed the market by over 60%. In recent years, both companies exhibited compressed margins, flat revenue growth, and lagging returns. revenue composition, economic factors, etc.)

Balance Sheet 12

Balance Sheet Cash Flow Revenue Reorganization 12

AIHR

NOVEMBER 12, 2024

As the job market evolves, companies are experimenting with various employment types to build more flexible staffing models. One reason for this is the cost of slow hiring. However, top candidates are usually off the market in just 10 days. Salary format: Derived from revenue generated minus expenses.

Insurance 98

Insurance Staffing Compensation Benefits 98

Harvard Business Review

JANUARY 5, 2017

Political campaigns are marketing campaigns, messages aimed at selling a product. Yet by 2004 its market share was down to 3%. It focused its efforts on earning a majority share of Europe’s digital classified advertising market (a product that connects buyers and sellers). Bigger marketing budgets may not pay off.

Media 15

Media Advertising Fixed Costs Marketing 15