Stop Competing on Price by David Gomez

Author:David Gomez [Gomez, David]
Language: eng
Format: epub
ISBN: 9783961645985
Publisher: Bien Pensado
Published: 2017-04-18T00:00:00+00:00

ROI = (total revenue – total investment) / total investment x 100

Revenue: It’s the marginal income attributed to your difference.

Investment: It’s the cost of having implemented your difference.

For instance, in a very simple way, let’s say that in order to improve the design of your product, you need to invest $10,000 in molds, tests, and engineering costs; $5,000 in packaging and packing adjustments; and another $15,000 in communications to let the market know about your new design. In total, you would be investing $30,000 in differentiating your product. Then, for the project to make sense, you would need to obtain marginal gains of at least $30,000 to reach the breakeven point. If the marginal gains of this differentiation were $40,000, you would be obtaining a ROI of 33 percent, like this:

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