Profit Planning - Backtesting
 Make the Earnings You Estimate

All well and good, you say. But I've already got a system for estimating and budgeting. Replacing it with something new, even if it offers me a lot more information, is going to throw us into chaos. Our old pricing compared to the new will be apples and oranges.

We agree completely, which is why performing what we call a Backtest is so important: it is the bridge between the old and the new. And along the way, building it will provide vital information about each of your customers.

A backtest is conducted by re-estimating a broad, representative sample of the business booked by the company over the previous six months using the newly constructed MHRs and data from the Profit Plan. The booked selling price is then compared to the estimate's out-of-pocket cost, and the resulting Contribution is logged and analyzed.

Backtesting is the link between the old pricing system and the new management tools afforded by Profit Planning.

For a sample of one of the many reports generated from backtesting, please see the Deliverables link.

For additional information, contact Howie Herbitter.