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Company name changed. Numbers changed.
Company X sells products.
Company X wants to know if an advertising campaign makes sense.
But the percentage of contacts who buy depends on the price.
For example, at 21 euros per unit, 18% of contacts will buy
But at the lower price of 14 euros per unit, 37% of contacts will buy
Let's assume that the relationship is linear between these two endpoints.
Is this good enough?
You Decide.
What is the big picture?
What did we learn?
One can vary all the parameters and make a decision based on
the predicted net profit in each case
One can show the relationship between ten (10) variables in a
single graph!
This kind of a special graph has its own name.
The name is...
Case X:
A practical example of graphical visualization.
An average advertising campaign will generate 30 contacts.
The salary for production workers is 12 euros per hour.
Not all contacts buy, but on average 26.7 units are sold to those
who do.
Each worker produces an average of 6 units per hour.
Therefore the labor cost is 2 euros per unit.
Suppose we try a price of 18 euros, about in the middle?
The predicted gross profit for the campaign is around 1675 euros.
Raw materials cost 8 euros per unit.
So the total direct cost is 10 euros per unit.
This means that 800 units could potentially be sold by the
campaign.
Don't forget to subtract the cost of the campaign from the gross profit!
Nomograph.
nomographics.com