This lowers risk but can also lower the profit if the event is a success. Organising an event which involves paid speakers? Rather than offering them a set speaking fee (fixed cost) consider a profit share approach (variable cost) that scales with the success of the outcome. Consider alternative business models to lower risk.So monitoring them and challenging them regularly is crucial. At the same time, they can help you reduce costs in your ‘lean times’ and are the first place you go to cut costs. The volatility of variable costs can cut your profit margins and even cause an abrupt loss for your business. Variable costs change continuously from month to month and they can easily get out of control. A useful metric to watch is your average fixed cost which equates to the total fixed cost/number of units made. Your rent can be increased after the end of the lease agreement or utility costs can rise, all of these having an impact on your business. In the long run, you may also deal with changes in fixed costs, caused by new contractual agreements or schedules.
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