These Savvies explore the topic of Business in more detail —
Before we continue, let’s consider inventory for a moment. Just what is “inventory”? For our purposes, it’s simply the stacks or boxes of your products that you’ve printed, recorded, or burned… but you haven’t sold yet. But how you feel about inventory is more complex.
Now let’s go back to the idea of "twofers" and pursue that line of thought a little further. If selling two-for-one can be advantageous (and even profitable), what about three-for-one — “buy one, get two free”? This obviously can’t work, can it?
So far, you’ve been looking at the transactions from your (the seller’s) point of view. What about your customers? What do they think?
So far, we’ve been considering product sales, but running the numbers applies to many other areas of your business as well.
Now it’s fine to say “run the numbers!” But what do you do when you don’t have any numbers to run? What if you don’t know how your customers will respond to your offer? What if you don’t know how many widgets you’re going to sell?
First, if you do have the numbers, use them.
If you don’t have (or can’t get) reliable numbers, then you need to perform an estimate. Simply put, an estimate is where you develop new numbers from other numbers.
Of course, sometimes you can’t even develop an estimate. In that case, you need to guess! (Sometimes called a “guesstimate” — making a guesstimate sounds more reliable, but it’s still a guess.)
So here are your guidelines for acquiring your “numbers” —
One of our first examples of “running the numbers” had, as one of its factors, the production cost of a CD. It probably doesn’t surprise you that the cost of production is important; but it may surprise you that, once again, the “obvious” answer can be the wrong one.