CBC Excel simulator with Conjoint.ly

For each conjoint study on Conjoint.ly, one of the outputs we provide is an Excel profitability model (also known as CBC simulator). By letting you simulate the market environment, it lets you estimate the profitability of your new product development (NPD). These calculations are based on a simple model:

Contribution margin (profit) = Marginal net revenue × Sales volume

Here is how it works:

Example: Specify marginal costs and revenues

Step 1. Specify marginal costs and revenue for each level:

  • Marginal revenue is typically the price you receive from customers for your product. For example, “price of $45”, $45 will typically be your marginal revenue.
  • Marginal cost is how much it costs you to deliver this level. It might make sense to choose the least costly level of each attribute as baseline (0 marginal cost) and assign marginal costs to the other levels of that attribute.

Example: Specify current market players

Step 2. Describe the current market landscape in the language of attributes and levels. Include both your current competitors, as well as any of your own products. We will estimate market shares based on the responses of the experiments’ participants. They might not necessarily match actual market shares, because they do not take into account things like distribution, promotions, etc. However, if you specified the key drivers of customer behaviour among your attributes and if you specify all the main products, the simulated market shares should be close to reality.

Example: Find optimal NPD

Step 3. Describe the future market landscape (what products you expect to see on the market when you launch your new offering). This is where our simulator (with one click) will help you decide on the best new product development, taking into account the following information:

  • Existing product offerings on the market
  • Your marginal costs and revenues
  • The predicted market shares for NPDs