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Louis

am 22. Nov. 2024

Europa

Frage zu

Clarification on how to compute expected profit

Hi,

why in computing expected profit you multiply both revenue and costs by 25% or 80%? Why isn't just the revenue part?

After all, what is subject to probability is winning the tender, which gives you a revenue, but you'll sustain the cost anayway.

Thank you in advance for your support.

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Hagen

Coach

bearbeitet am 22. Nov. 2024

#1 recommended coach | >95% success rate | 8+ years consulting, 8+ years coaching and 7+ years interviewing experience

Hi Louis,

I would be happy to provide the solution:

The total costs, consisting of the writer's personnel costs, the manufacturing costs for the books, the rental costs, and the investments in new machinery will only be incurred if the tender, which is nothing other than a bidding process, is won. Therefore, the probability of winning the tender must be taken into account for both revenues and costs.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen