Consulting Econ Terms

Revenue

Revenue = Quantity * Price

Total Variable Costs

TVC = Quantity * Variable Costs(*variable costs are costs that directly increase for each additional unit of product made)

Costs

Costs = Total Variable Costs + Fixed Costs

Profit

Profit = Revenue - Costs

Profit

Profit = (Price - Variable Costs) * Quantity - Fixed Costs

Contribution Margin

Contribution Margin = Price - Variable Cost

Profit Margin

Profit Margin = Profit/Revenue

Return on Investment

RoI = Profit / Investment Cost

Payback Period

Payback Period = Investment Cost / Profit per Year

Output

Output = Rate * Time

Utilization

Utilization = Output / Maximum Output

Market Share

Market Share = Company Revenue in the Market / Total Market Revenue

Relative Market Share

Relative Market Share = Company Market Share / Largest Competitor's Market Share