Harvard Business Review

JULY 2, 2014

Managers typically use breakeven analysis to set a price to understand the economic impact of various price- and sales-volume scenario. 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.

Variable Costs 10

Variable Costs Fixed Costs Sales Sales 10

Harvard Business Review

JUNE 22, 2015

To figure total costs you first multiply the unit quantity sold by the variable costs per unit, then you add the fixed costs. Like this: Note that Price per unit – Variable costs per unit is equal to the Contribution margin per unit. The fixed costs to advertise the flip flops are $2,000.

Variable Costs 15

Variable Costs Fixed Costs Advertising ROI 15

Harvard Business Review

OCTOBER 29, 2015

This makes financial sense in industries with high fixed costs and low variable costs: larger sizes enable the company to charge higher prices that, even if they are just slightly larger, absorb a higher portion of fixed costs, while reducing packaging cost per volume and attracting value-minded consumers.

Fixed Costs 14

Fixed Costs Variable Costs Marketing Sales 14

Harvard Business Review

NOVEMBER 30, 2018

Car sales in the U.S. But car sales are now probably past a cyclical peak, not only in the U.S. Capital-intensive factories have a high-fixed-cost, low-variable-cost operating model. GM has good immediate reasons for its decisions.

Fixed Costs 14

Fixed Costs Assets Cash Flow Variable Costs 14

Harvard Business Review

SEPTEMBER 9, 2015

Here’s a hypothetical illustration of the bullwhip effect: A retailer might experience an X% drop in sales owing to some external event. As a result, it might reason that future sales will be low, too, because most forecasts are based on past experience. retail sales (representing consumer demand) declined by 12%; yet U.S.

Sales 15

Sales Sales Operations Fixed Costs 15

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. Before, a big conglomerate like GE diversified its risks by mixing pro-cyclical and counter-cyclical businesses.

Cash Flow 15

Cash Flow Engineering Fixed Costs Sales 15

Harvard Business Review

AUGUST 17, 2012

Cipla, an India-based producer of low cost antiretroviral drugs (ARVs) is one of the biggest success stories in the pharma industry. It has doubled its market cap in the five years and sales reached almost $1.5 billion in the year ended March 2012, up close to ten times since 2000.

Fixed Costs 13

Fixed Costs Marketing Sales Sales 13

Harvard Business Review

OCTOBER 6, 2014

Aldi UK sales grew from $6.3 Hard discounters aim for twice the volume with the same fixed costs so they can make the same returns at half the gross margin. Aldi’s sales per employee are already twice those of Tesco in the UK. The goal is to attract the British middle classes, and it appears to be working. billion to $8.6

Reorganization 15

Reorganization Fixed Costs Transportation Sales 15

Harvard Business Review

MAY 8, 2012

Bharti's innovative business model converted fixed costs in capital expenditure to a variable cost based on usage of capacity. Through the outsourcing arrangements, Bharti dramatically lowered its costs while ensuring high quality for customers, since vendors had world-class competencies in their domains.

Balance Sheet 12

Balance Sheet Variable Costs Telecommunications Fixed Costs 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. This notion can make managers falsely complacent.

Fixed Costs 12

Fixed Costs Transportation Implementation Marketing 12

Harvard Business Review

DECEMBER 25, 2013

A visual way of depicting the plan — one that connects the starting point and the destination, and takes into account all the nuances of a business (more sales in fourth quarter, a spike in sales at month end and quarter end, etc.), seasonality, trends, etc. will help with understanding the next variable, variation.

Fixed Costs 9

Fixed Costs Sales Sales Revenue 9

Harvard Business Review

OCTOBER 7, 2015

However, free cash flow per share remained impressive at both companies, and fixed cost ratios remained somewhat intact. It displayed a 10% decrease in revenue growth while the other unit exhibited sales growth of 75%. In recent years, both companies exhibited compressed margins, flat revenue growth, and lagging returns.

Balance Sheet 12

Balance Sheet Cash Flow Revenue Reorganization 12

Harvard Business Review

FEBRUARY 24, 2015

In parallel, it reduced its fixed costs by restructuring its industrial footprint and overhead structure; increasing sales, marketing, and R&D expenditures in targeted areas; and dramatically reducing working capital. Does the business have an adequate financial structure?

Assets 11

Assets Revenue Energy Fixed Costs 11

AIHR

APRIL 20, 2023

Various models have emerged that calculates the impact of learning spend and equate it to productivity, customer satisfaction, increased sales or improvement in revenue. They also have a manufacturing plant in Indiana, a sales division spread across different regions and a head office in New York.

Sales 98

Sales Sales Fixed Costs Marketing 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. They're out to kill the cost-per-thousand or CPM-based ad sales model.

Advertising 16

Advertising Variable Costs Scaling Media 16

AIHR

NOVEMBER 12, 2024

When to offer it: If your company has fluctuating workloads or seasonal needs or has to reduce fixed labor costs. Commission-based employment This arrangement bases a worker’s compensation primarily on the sales or revenue they generate. Cost management: You must carefully weigh the costs of different employment types.

Insurance 98

Insurance Staffing Compensation Benefits 98

Harvard Business Review

MARCH 21, 2013

sale or other transfer of ownership." But since books have low marginal cost (printing and distribution) relative to fixed costs (research, writing, and editing), Wiley can profitably sell its textbooks there at lower prices. Originally a judge-made principle, "first sale" was codified in a 1909 revision of U.S.

Sales 19

Sales Sales Fixed Costs Software 19

Harvard Business Review

MARCH 21, 2013

sale or other transfer of ownership." But since books have low marginal cost (printing and distribution) relative to fixed costs (research, writing, and editing), Wiley can profitably sell its textbooks there at lower prices. Originally a judge-made principle, "first sale" was codified in a 1909 revision of U.S.

Sales 12

Sales Sales Fixed Costs Software 12

Harvard Business Review

NOVEMBER 16, 2017

Such narrowly focused conditions would be far less intrusive than the forced sale of some assets or outright rejection of the deal–remedies whose very existence would torpedo a broader legal challenge. A rational content owner would look for new markets, not foreclose them.

Government 10

Government Media Fixed Costs Marketing 10

Harvard Business Review

JANUARY 5, 2017

Once a “connected” product draws in users, those users effectively become the sales force. The media’s bias toward big events stems from three features of its economics: Fixed costs. The cost of covering a golf tournament doesn’t depend on whether Tiger Woods plays. Expectations matter.

Media 15

Media Advertising Fixed Costs Marketing 15