Worked examples / People

Reduce headcount

Ten people of fifty, about $70,000 each. Severance up front; the work they did stops over a few months.

On these figures, the costs are larger

On these figures the costs come to $965,867 more than the saving.

The saving, on paper$2,100,000over 3 years

What it costs$3,065,867counted over the same years

On paper it is worth $2,100,000 over 3 years.
What it costs comes to $3,065,867: every $1 of saving costs $1.46.
It looks good for the first 4 months and turns negative in month 6.

Put in your own numbers

This is a worked example with illustrative figures, not data about any real person or company. Change any of them in the calculator and the answer changes with them.

How this answer was worked out

One-time cost	$150,000
Earnings lost because of it	$2,565,867
Side costs	$270,000
Cost of having to undo it, by its chance	$80,000
What it costs in all	$3,065,867
Cost per $1 of saving	$3,065,867 / $2,100,000 = $1.46
Result at the end	-$965,867

Every formula is written out on the formulas page.

What the calculator asks you

The expected saving each year
The one-time cost of making the change
What the thing being changed was earning
How much of it is affected, and how much of that was truly spare
Which parts of the business rely on it
The chance of having to undo it

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How this answer was worked out

What the calculator asks you

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