Wait. Cost of Sale? Don’t sales make us money? How can it cost us? Coming from the hypothesis that God does not make direct deposits, the fact that they gold rush is over, bitcoin possibly but it’s up in the air, and stealing is unacceptable -- getting money effortlessly is nearly impossible. It takes effort to turn prospects into long-term customers. You must focus on generating awareness, establishing trust, building a relationship, and creating a conducive environment where people are ready to buy from you.
A few posts ago, we talked about project P&L. To quickly recap the concept behind project P&L is let me give an example regarding fixed fee projects:
If I ask a client for $10,000, then I will do X. If they give me $1000, then I will do Y. If I ask for $45,000, then they will get the Z package. For each package, there is a finite scope of work. I give them the scope and then the either sign or don’t sign the deal. But it is not always that simple. Sometimes, it takes me longer to do what I said I will do. Sometimes, I underestimate the needs of the project and I have to do a lot more than I originally estimated.
When my son was eleven years old, I had a conversation with him about accountability. I was telling him that in economics, everyone must carry their weight and pay for their own way in the world. He was drinking milk and eating toast while I was practically ranting to him about the state of the world. When I started arguing that it was not fair for over-performing assets to subsidize underperforming assets and non-performing liabilities, he put his mug down and exclaimed, “I should stop drinking this milk then.”
As a data scientist, numbers do not scare me. In fact, I love numbers. When those numbers have a dollar signed attached to them, I love them even more. Money and data go hand-in-hand. In the business world, the best thing to keep track of finances is a profit and loss (P&L) chart. This is also known as the common accounting practice of job costing.
It was eight p.m. on a Friday night and I was out with some friends. We were sitting around a table and chatting. At some point, it became a bragging contest where we were essentially trying to outdo each other. My friends and I went back and forth for a little while. Finally I said, if there was a sweet deal on the table tonight, then I could have more than a million dollars in cash in this house by midnight. Suffice enough to say that I won our playful argument.