When is a Dollar not a Dollar?

Source: When is a Dollar not a Dollar?

An exploration of how the business value of a dollar varies depending on the context.

  1. Money has different marginal value to a customer depending on where it falls on their balance sheet.
  2. Some types of revenue require a lot more effort and resources to earn than other types.
  3. Timing matters, and a dollar today is worth more than a dollar next year.
  1. Cost vs. Revenue
  2. The Principal-Agent Problem
  3. Existing Expense vs. New Expense
    Companies and teams often have existing budgets for common expenses.
  4. Above vs. Below Discretionary Spending Limits
  5. Selling Services vs. Customized Products vs Off-the-shelf Products
    Different types of revenue have very different scaling characteristics.
  6. Selling to Many Stakeholders vs. One Stakeholder
    Products with many stakeholders are hard to sell because you have to make everyone happy — but different stakeholders will have different, often conflicting, incentives and preferences.
  7. Monthly vs. Upfront Payments
  8. Selling vs. Upselling
    It’s typically easier to sell more products to an existing customer than to find a new customer.

 

Although cost-dollars-saved are fully and immediately realized, cost cutting is limited — the most cost that can be saved is 1x expenses. There is far greater potential for revenue growth than for cost cutting.