Cost of Saving: make informed decisions Win or lose calculator

The cost of saving money

What are you weighing?
Start from an example, then change the numbers

Three numbers

$
$
Sales or output that could not happen without it.
%
What relies on it? Tap all that apply.
More detail (optional: one-time costs, spare capacity, timing, risk)
The saving
years
$
One-time cost: severance, switching fees, penalties, set-up.
% a year
Leave at 0 for plain sums in today's money. Enter your cost of capital to see present values.
What the cut thing was earning
%
%
Spare means doing nothing useful. Be hard on yourself. Margin is what is kept from each dollar after its other variable costs, leaving out the cost you are cutting.
months
How strongly each part relies on it
Side effects
$
Overtime, rework, returns, good people leaving.
%
$

Show the working

What is behind the answer

    A cut that pays

    This assumes the idle part is removed first, and that the saving and the other costs scale with the size of the cut. See the formulas page, F13.

    The books and the bank balance, month by month

    Show the figures as a table

    Where the saving goes

    How the answer is worked out

    This is a differential analysis: the business with the change compared with the business without it, counting only what differs.

    net result = saving - total cost of the change total cost = one-time cost + side costs + lost contribution + expected reversal cost multiple = total cost / saving

    The books show the saving and the one-time cost beside the decision. Side costs are booked under other headings. The lost contribution is an opportunity cost, which financial statements do not record at all. The answer is arithmetic on your own estimates and is only as good as they are.

    Every formula, every input, the assumptions and a worked example are on the formulas page, so the result can be checked independently.