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Growing Software by Louis Testa

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Evaluating Choices

Cost-benefit (CB) analysis is a classic tool with both formal and informal definitions. In this section, the discussion is not financially formal but uses a variation on the calculation to account for probability of seeing the benefit. CB analysis is used to determine which projects will create the most revenue. This analysis is underutilized in the software market because of the complexities in estimating potential benefits of any investment and the ability to accurately forecast the costs of vaguely stated objectives. However, CB analysis can be an effective sorting tool for small software companies.

Performing CB calculations on future product proposals offers insight into which projects are most likely to succeed. More important, ...

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