Join Rudolph Rosenberg for an in-depth discussion in this video Projecting variable OPEX, part of Making Business Projections.
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We are now left with projecting variable operating expenses.…Before completing our bottom-up PM projection.…As mentioned earlier,…most of your variable costs should be part of COGS.…And therefore already accounted for in your gross margin.…Whatever variable costs are left,…will appear under Opex.…A simple and efficient way to project variable Opex…is to tie it to your revenue projection.…To do that, we first need to get an understanding…of how much variable Opex we have for each dollar…of revenue we've generated.…
That way, based on our revenue plan for the coming year,…we can evaluate what should be the resulting variable Opex.…To do so, let's take the previous year as a baseline.…In your Opex data set,…just select the remaining expenditures…that did not get classified as fixed Opex.…Or exceptional Opex.…And divide that number by your revenue for the same year.…If, for example, you have $10,000…of variable costs for the best year.…For a revenue of one million dollars.…
Then you have $10,000 divided by one million dollars…
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- Forecasting vs. planning
- Dealing with exceptional elements
- Projecting revenue
- Adjusting for changes and seasonality
- Creating product-level projections
- Estimating costs and operating expenses
- Projecting gross margin
- Setting up targets and goals
- Developing worst-case scenarios<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.