A profit formula is the blue print that defines how the company creates value for itself. The profit formula is tightly coupled to the [[Customer Value Proposition]] and helps defining contraints on revenue, fixed costs, variable costs, etc.:
** ''Revenue model'', price x volume
** ''Cost structure'', direct & indirect costs: dominantly driven by the key resources in the business model
** ''Margin model'', given the expected volume and cost structure, the contribution needed from each transaction to reach profit
** ''Resource velocity'', how fast we need to turn over inventory, fixed assets and other assets. How well do we need to utilize resources to support expected volume.
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Part of [[M8-S2 - Reading - Mark W. Johnson, Clayton Christensen, and Henning Kagermann, Reinventing your business model]]
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businessmodelling_public
created
Thu, 16 Jun 2011 19:43:47 GMT
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dirkjan
modified
Thu, 16 Jun 2011 19:43:47 GMT
modifier
dirkjan
tags
M8
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creator
dirkjan