Table of contents
Any Margin Adjustments?
In most cases, Idea Leaders should leave this at zero. Don't worry, the Validator will love figuring this out.
Example
- A pricing decrease will often increase sales volume. You will have to spend more money to make more products.
- Likewise, a pricing increase will often decrease sales volume. You will spend less money on making the product.
- The change in production costs is entered as a margin adjustment.
Due to a pricing decrease, you estimate selling 100,000 additional units at $10 each. This means a yearly revenue increase of $1M. ($10 x 100,000)
But it will cost the business $200K to produce the additional items ($2 per item x 100,000 additional items). Adjust the margin by subtracting this production cost.