In Chapter 6, we explained that the process of determining whether or not a sales proposal adds value is called “quantifying the solution.” If the cost of the proposal is offset by added value, closing the sale will be much easier. In business-to-business selling, quantifying the solution is very common. Let’s assume you represent a manufacturing company that sells robots—a reprogrammable machine capable of performing a variety of tasks. The two primary benefits are (1) payroll cost savings and (2) vastly improved quality. One way to quantify the solution in this case is to use a simple cost–benefit analysis (see Table 6.1). This involves listing the costs to the buyer and the savings to be achieved from the purchase of the robots.

Another way to quantify the solution is to calculate the net profits or savings, expressed as a percentage of the original investment. This is called return on investment (ROI). Using the following formula, you can determine the net profits or savings from a given investment.

If the robotic system costs $16,000 but saves the firm $4,000, the ROI is 25 percent ($4,000/$16,000 × 100 = 25 percent). Some companies set a minimum ROI for new products or cost-saving programs. Salespeople often acquire this information at the need-assessment stage and then include it in the written proposal.

Space does not permit a review of the many methods of quantifying the solution. Some of the additional ways include payback period, opportunity cost, net present value, after-tax cash flow, turnover, and contribution margin.