Three Good Ways to See How Your Business Is Doing

December 2009
by Marion Gropen

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TOOLBOX: METRICS

Three Good Ways to See How Your Business Is Doing

by Marion Gropen

“You can’t manage it if you can’t measure it.” You’ll hear that in every business school. An analogy offers another way to express it: You don’t really know what’s happening in your business until you can put numbers to it, just as you don’t really know a word’s meaning until you can define it.

So, what metrics work for publishers? That depends on your business and your goals, but there are three that work well for most of us:

• contribution margin

• total overhead expenses

• rate of accuracy of your projections

Contribution Margin

Contribution margin is the profit, before you assign any overhead to it. In other words, you add up all revenue, and then you subtract your cost of goods sold (COGS), distribution expenses, marketing expenditures, and other directly related costs.

You can and should calculate contribution margin as you make a variety of decisions, including whether to acquire a particular book, whether to undertake a particular marketing campaign, and whether titles are performing as expec…IBPA Members – Click here to view the full article (login required).

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