Why You Must Make Your Levelised Business Case
Levelised costs intrigue me. Spelt levelized in American, I first came across this term related to energy costings (for where there’s even a wikipedia entry).
The concept acknowledges that you never fully get to compare apples with apples. Many a time there’s an orange instead. Or an ostrich. Something totally different masquerading as comparable in some oblique, bizarre way.
More specifically, it seeks to redress the imbalance when certain costs ought be included that often get neglected.
If you add up all of these underpinning costs, then take into account the intended product that follows from your solution, you perhaps get a truer view of costs.
Something, not as is the case with energy, a ‘power’, will be generated by what you provide. If you can relate that to the overall effort taken to unleash it compared with alternatives, then you may well be able to show yourself in better light.
I tend to operate above the bottom rungs of the price scale. Business Case selling is prevalent. Also meaning the pressure can be often intense to succumb to the race-to-the-bottom, and discount with a dangerous slash.
Levelising could help you justify your extra pricing. It is surely there for a reason. Best you show buyers why.
A constant I see is the classic on-cost versus day-one cost subterfuge.
Then there are those opposing options that seek to shield any sunk cost, maintenance or downtime ramifications, when you – as the responsible partner – have both acknowledged and built them in.
Have you your own LCOP (Levelised Cost Of Product)? How are you levelling your playing field in the face of stiff, cheaper yet less beneficial, competition?
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