Value Analysis

• What is Value Analysis
  Making sense out of numbers Numbers need to be put in perspective Every client will view numbers differently	Only a Trillion
  	How much is one Trillion? We know that one trillion is one million million. We hear the number all the time but can you estimate: One Million Seconds? One Million Inches? One Trillion Seconds? One Trillion inches?
  Numbers every sales person should know
  Productive Working Time	Std	With Vacation
  Weeks per year	52	50
  Days per year	250	240
  Hours per year	2080	2000
  Weeks per Month	4 1/3	4 1/6
  Hours per Month	173.3	166.66

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• Simple Value Analysis
  Good for products and services Compare to labor costs No matter how obvious it is to you Don't assume that the buyer will do it	Break down the cost of your product by
  	year month week	day  hour minute
  Example $10,000 machine 5 year life	$2000.00	Year
  	$166.66	Mon
  	$38.46	Week
  	$7.94	Day
  	$.96	Hour

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• Other Logical Breakdowns
  per unit of net weight	Steak Corn Flakes Ounce .25 .35 Pound 4.00 $5.6
  per unit of distance	Insurance Gas Gallon   $2.00 Year 2000 1200 Mile $.16 $.10
  per unit of product sold
  per unit of volume	Gas Coffee Cup $.1875 $1.00 Gallon 3.00 $32.00

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• Build Up Savings
  "How many hours per day do you think you can save?"	2
  "What does one hour cost you?	8
  Build up to daily, weekly, monthly, annual and lifetime costs	$16 per day $80 per week $345 per month $4160 per year $20,800 over a 5 year life

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• Break Even Analysis
  Good for advertising and other marketing services Good for products that increase productivity "How many units do you have to sell to break even"
  Example: Stereo store is considering a new ad campaign that will cost $10,000 per month
  Average profit per sale	$200
  Number of extra sales per month to break even	500
  "Do you think this program will generate 500 sales per month?
  Number of extra sales per week to break even	154
  "Do you think this program will generate 154 sales per week?
  Number days open per month	30
  Number of additional sales per day to break even	17
  "Do you think this program will generate 17 sales per day?

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• The Big Picture - Price vs Cost

  When comparing your product or service include all the costs Then convert every thing to a common dimension for comparison

  Compare keeping a car vs buying a new car vs leasing a new car

• Incorporating Interest
  Compound interest is confounding Any stream of income and expenses can be converted to a present or future sum Any present or future sum can be converted to an income or expense stream Website For Financial Calculators Online Conversions - Also has calculators	Understand the rule of 72's Convert and Compound savings Complex Interest

• Value analysis for retailers and resellers

  Compute the profit Estimate the time Add in other benefits Will your products bring in new customers for the retailer Will your product create recurring income supplies repairs replacements or upgrades Annualize the profit Compute return on investment Compare to other items sold Return per square foot Return per time period