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Some products and services are so outstandingly innovative, and their benefits so obvious, that they virtually sell themselves. Regrettably, most are not. Innovators and other new product and service developers can easily lose sight of the fact that it is often a very big step for potential customers - already fully occupied in their own businesses - to take a decision to buy a new product or replace an existing supplier. It is often easier for them to stay with the status quo, even if they can appreciate the inherent benefits of a new offering. The only way to break through this inertia - which can be a surprisingly formidable barrier to commercial success - is to have ready and compelling answers to the obvious question: Why should I buy your new product or service or replace my existing supplier?

Presenting life cycle cost comparisons for new products or services against independent criteria and/or those of existing competitors can go a long way towards breaking down barriers which might otherwise be erected by potential customers in order to avoid having to make a purchase decision. Wingarra BMI's life cycle comparative cost (L3C) models are specifically designed to do just this.

These models are typically developed in order to assess the full life cycle costs and benefits of new products and services against their current and anticipated major competitors. They can accommodate product/service cycles from several months up to 20 or more years and can either include or exclude variable sets common to both the new and existing product/service regimes. They focus specifically, however, on differential variable sets.

After all comparative costs and benefits have been precisely defined and calculated, they are totalled for the life cycle specified and defined in both current $ terms and in discounted cashflow (DCF) terms. At the very least, these models are likely to encourage potential customers to test their own variable assumptions in the L3C model. This can be a very valuable step in engaging the customer.

Set out below are example screenshots taken from an L3C model designed and constructed by Wingarra BMI. This one was used to model the life cycle costs of a client's online software product against those of a typical competitor. In this case, we mapped comparative life cycle costs over an assumed five year website life cycle.

 

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Note: model run on dummy data for screenshots.

Input schedule	Cashflow map (5 year)
Comparative costs summary - current $ and DCF (5 year)

 

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