Statistics in Sales

June 2007,Alex Righolt

Overview

We don’t sell cheap products. The client decides whether a product is cheap or not. That is why we instead use the word “economic”.

We’ll look at the terms “Total Cost of Ownership” and “Price Quality Ratio” that allow us to compare prices.

Overview

This presentation also introduces the “Mean Time Before Failure” and “Failure Rate” that allow us to compare reliability.

TCO

Meaning:Total Cost of Ownership.

Definition: TCO = Direct Costs + Indirect Costs.

Direct costs: usually cost of purchase Indirect costs: consumables + maintenance +

repairs + energy consumption.

TCO

A $300 laserjet printer becomes more economic than a $100 inkjet printer after 5,000 printed copies.

At 10,000 copies:the TCO of the inkjet is $550the TCO of the laserjet is $350.

PQR

Meaning:

Price Quality Ratio

Definition:

PQR = Price

Quality

PQR

Example:

Shop A sells a PC at $700. It is 50% better than a PC sold at $500 in shop B.

PQRA = $700 / 1.5 = $466PQRB = $500 / 1.0 = $500

It shows that the PC sold at shop A is a better deal, even if its price is higher.

MTBF

Meaning: Mean Time Before Failure

Definition: The average time between failures.

The MTBF is used to measure reliability of items.

The Rate of Failure is calculated as:

RF = Failures

Millions of hours

MTBF

This ‘bath tub’ graph shows the typical Rate of Failure over time.

Analysis of situation 2

The graph shows that many devices fail early in their life cycle. Ideally, this period is covered by warranty.

After that the Rate of Failure is lower and constant.

Near the end of its lifetime it increases again.

For consumer electronics, The Rate of Failure is lowest in the period of 3 months to 7 years.

Conclusion

You have seen how TCO and PQR are used to describe and compare the costs of a product.

MTBF is used in expressing reliability.

Statistics in Sales.

The end