Publishers of technology books, eBooks, and videos for creative people

Home > Articles > Design

  • Print
  • + Share This
This chapter is from the book

Setting Metrics: Cost/Benefit Analysis

Cost/Benefit Analysis (CBA) is another measurement tool, used to determine the financial ramifications of undertaking new projects, implementing new processes, and making purchases and/or staffing decisions.

Whereas ROI is summative, CBA is a formative tool, used to determine the feasibility of a project before it begins. CBA helps determine objectives and set metrics for how to measure success.

Creative teams may be especially interested in the concept of Cost/Benefit Analysis, as this form of measurement attempts to quantify elements of “soft value” by assigning financial representation to intangibles (can we measure emotion?). It also seeks to assign dollar values to things that don’t usually have them (can we estimate the financial value of a single website visit?). The use of a common unit of measure, like money, helps the entire project team, regardless of discipline, share information. When it’s well informed, CBA is a useful exercise to aid decision making and to predict the profitability of an undertaking. The CBA formula is simple:

  • Positive Factors – Negative Factors = Project Viability

or it can be expressed as:

  • Benefits – Costs = Profitability

Comprehensive and accurate information gathering is crucial to the success of this exercise. The steps are seemingly simple, but require detective work to source accurate and vetted numbers.

Step One

Generate a list of all hard and soft costs associated with the project.

For example, if you are hired to produce a mobile application to improve a patient experience, hard costs might include flat fees associated with conducting user research, design and development, and distribution. Soft costs might involve estimating expenditures to health-care staff on effective use of the app in patient interactions, or measuring the time needed for the user to adopt new tools. As you might imagine, establishing numbers for hard costs is a much easier exercise than for soft. Determining appropriate estimates for soft costs requires creative investigation. In the case of training staff you could gather data about how many billable hours were spent in past training exercises. In the case of the user adoption rates, you might reference academic studies on technology adaptation rates to inform your projection.

066fig01.jpg

Click to view larger image

Before developing the prototype for Medley, a patient information system for mobile devices, the design team at Artefact had to consider all of the costs and potential benefits.

For example: The team knew that almost 75% of health-care professionals owned iPhones and iPads, presenting an opportunity for a mobile solution.

However, most hospitals have already purchased expensive electronic medical records systems—the cost of which is prohibitive to the adoption of new tools. Therefore, Medley would need to integrate seamlessly with existing systems.

Step Two

Identify all project benefits and associated remuneration.

In our new mobile application example, hard benefits may take the shape of increased patient satisfaction (work with the medical team to gather these estimates; if the proposed project is a major paradigm shift, you may have to engage external sources). Soft benefits might include increased perceptions of satisfaction, credibility, or competence (ask your client to share the current process for determining levels of patient satisfaction). Collaborative detective work is essential when forecasting benefits.

Step Three

Subtract costs from benefits and analyze the results.

Once you have an informed estimation of hard and soft costs and benefits, you can formulate a project’s profitability—or “viability” if you don’t want to be as locked to the numbers. If the benefits outweigh the costs, then theoretically, your proposal merits serious consideration.

There are numerous considerations when determining the relationship between costs and benefits. Include some of the following questions as you weigh the results of the information you’ve gathered: What would happen if your client did nothing? Does the cost of the client’s investment in the project outweigh inactivity (are there short-term and long-term answers to this question)? What would be lost if the project failed to meet objectives? How long will it take to earn back the investment in the project—or, how many sales will have to be closed to make back the initial design investment? Determining how fast investments are returned can persuade decision makers to greenlight your project.

To track financial data, clients and designers must be willing to work together, sharing and evaluating numbers at the start and completion of a project. All too often, creative teams walk away after artwork has been delivered and aren’t involved with the work’s applied use. In this scenario, designers never get to see the results of their efforts, leaving the framing of the outcome entirely to the client’s perspective. This also creates a calendar-based service relationship. (“Hi Bob, it’s that time of year again to start thinking about producing the annual.”)

068fig01.jpg

Click to view larger image

Medley works on multiple mobile platforms.

068fig02.jpg

Click to view larger image

Product benefits include: visualizations of patient data for caregivers (easier to process than lengthy written descriptions); tools that help prioritize patient care; and the promotion of more efficient collaboration amongst health-care team members.

If you’re going to use metrics to establish impact, your client must view you as a partner. And remaining involved and responsive after the artifact has dropped positions you as an invested strategist. (“Sally, what if we use the message from the annual to drive all of this year’s investor-relations materials? Let’s see if we can put together a survey to determine how that message is resonating with key stakeholders.”)

Remember, not everyone is comfortable talking about money (this is a universal truth, from awkward family dinners, to dating mishaps and marital spats, to one of the top indicators that a prospective client is a future nightmare). Do you have a client who will share his or her sales projections? Or does the client treat any internal financial information as state secrets? If the corporate culture doesn’t allow for collaboration, none of these tools are available (and it’s probably an indicator that reciprocal partnerships aren’t either).

Build a relationship with your clients so that they understand how the work you’re creating is being used and what effects it has on their business, and then connect it to monetary impact. Help them recognize that they’re as responsible for actively engaging the collateral they’ve commissioned as you are for positioning it to serve them well. (If a marketing kit falls in sales’s desk drawer, does anyone hear it?)

  • These concepts, from initial measurement to applied use to tracking, don’t work if you spring them at the conclusion of a project.

Make thoughtfully setting metrics a part of your services agreement at the outset of a project—and a part of the culture of your work. Tracking those outcomes, and the associated revenue earned, connects design to the bottom line.

  • + Share This
  • 🔖 Save To Your Account

Peachpit Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from Peachpit and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about Peachpit products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites; develop new products and services; conduct educational research; and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email ask@peachpit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by Adobe Press. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.peachpit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020