Professional Documents
Culture Documents
Independent Publishers: Where To Cut Back, Where To Invest
Independent Publishers: Where To Cut Back, Where To Invest
Independent Publishers: Where To Cut Back, Where To Invest
Eagle or Turkey?
Feed or Starve?
Words to Manage By
“Cutting back is okay, but you have to know
which aspects of your business are worth
reducing and which require further
investment, even in a down economy.”
--George Green
e5 Global Media
Cost Control: Magazines
• Advertising is primary revenue source
• Keep costs in line with revenues using
– Required Cost Reduction (RCR) Calculator
• Publisher must recoup a portion of ad revenue
miss
• Process applied issue-by-issue
• Finance department monitors compliance
with cuts
The RCR Calculator
The RCR Process: Step 1
• Calculate the Ad Sales Miss
$ (28,050)
The RCR Process: Step 2 (cont.)
• How Much to Cover with Cuts?
• Considerations:
– Set a Trigger Point (minimum 10% miss)
– Are Misses Unusual or Chronic?
– What’s the Variance to Budget YTD?
– Are You in Investment or Cutback Mode?
The RCR Process: Step 3
• Calculate Commission Savings
Commission plan: 3% of sales
Jim 60% $ -
Bob 50% $ -
Total $ 660
SAVINGS $ 2,190
The RCR Process: Step 4
• Hunt Down Additional Savings
Print Costs
Postage Costs
Selling Expenses -
Circulation -
Marketing -
Editorial
Other
Total Commitments -
Variance to Requirement $ 2,190
The RCR Process: Step 5
• Track Cost Reduction Commitments
– Publisher completes RCR spreadsheet
– Finance makes sure cuts from future expense
budgets are delivered
Why Use the RCR Process?
• Focuses cost cuts in underperforming areas
• Forces all departments to share the pain
• Takes the drama out of a difficult situation
Where We’re Investing
• Products and Projects That Meet 3 Criteria: