Arjun Ken

The word “data” or “analytics” probably did not mean anything for product companies over 100 years ago. I guess there was little or no data to analyze products, and data did not drive decisions at that time. Also, collecting data was probably a time-consuming and expensive task. In short, the product world was simple without data.

Now, things are different. Products and products-driven companies have grown mammoth and complex in customer base, business, and solutions they offer. The only way to demystify them is through the use of data and data analytics. The revolution in computing that began in the late 1960s has fueled the growth of data and data analytics. Also, it deciphered the magical powers of mathematics and its application in everything we do today.

One of my friends recently bought a home, and we met for dinner. He explained how that purchase would turn into a good investment in a couple of years. At some point during the discussion, he uttered the phrase, “In 18 months from now, I will hit break-even”. I suddenly guessed he has a great analytical and business mindset and knows what he’s doing. “Break-even Analysis.” is an important analytical technique that is used by many wise investors and new businesses to know what it takes to turn things profitable. Let’s dig into this topic and understand what it is, why you do it, and how to perform the analysis in detail.

Definition

In simple terms, Break-even Analysis is an analytical technique to determine the least level of output (in units or dollars) the business needs to generate to fully pay off the cost of producing the goods or offering the services.

It is generally performed while developing a pricing strategy, either as part of a marketing plan or a business plan. The goal is to achieve a Break-even Point (BEP) at which the total costs and revenue are equal. That means there is no net loss or gain. Break-even.

Listen to this podcast by Adam Bader on “This is Product Management” with Anuraag Verma. For me, this is one of the best among the others in the series so far. I like the way how Adam relates Product Managers to Problem Managers and how he talks about the importance of psychology in solving real problems over perceived ones and to what extent you should be using that privilege. I like his empathy toward users.

If you don’t have time, listen to the last 10 min of the audio at least starting at 29:00s. He talks about why so many products fail and physiologically how big companies are hacking and exploiting (to the roof) natural human behaviour to their own advantage.

I am glad Adam Bader brought this up in the end. Technology needs to focus on real-world problems such as Transportation, Sustainable development, Climate Change, Healthcare, Poverty, etc. Too much focus on smartphones, connecting people digitally, and building apps that do not solve problems must stop. He talks about Space Tourism. Personally, I do not think space tourism is the world’s current problem. It is more of a want for riches than a need.

Podcast Link is here: http://tun.in/tlcege

#productmanagement #technology #innovation #product #podcasts