The Cigar Box Method® represents a comprehensive toolkit designed for the efficient calculation of profitability within various business ventures, particularly in the agribusiness sector. This innovative approach simplifies the process of determining cost prices, margins, break-even points, and overall profitability for both individual products and entire portfolios. By leveraging the Cigar Box Method®, businesses can make more informed decisions that are guaranteed to improve their agribusiness outcomes.
CB1 facilitates the calculation of cost price, gross margin, contribution, and break-even for a single product. By entering 24 specific figures into a spreadsheet, users can obtain a detailed overview of a product's profitability, carry out scenarios and sensitivity analyses, and benchmark against competitors.
Functioning as a planning tool, CB2 aids in decision-making regarding the expansion or reduction of product portfolios. It incorporates multiple CB1 sheets for each SKU, providing insights into the margin percentage and the significance of each SKU to the company.
CB3 serves as a monitoring tool, enabling management to track daily production costs per SKU and ensure full traceability of individual products. It combines operational monitoring with ISO 22000 documentation, supporting a systematic approach to data collection, entry, verification, output, database creation, and analysis.
As an investment analysis tool, CB4 assists in creating basic financial tables for investment decisions and loan applications. It builds on the knowledge of cost prices, margins, and contributions from CB1 and CB2, utilizing tables with assumptions and formulas to aid in decision-making.
CB5 offers a straightforward method for calculating prices and margins for single products within a supply chain, exemplified by Afghan carpet production. It highlights the profitability of each stakeholder in the supply chain and compares earnings with living wage standards.
Focusing on planning and monitoring customer satisfaction, CB6 evaluates product development and quality improvement efforts based on customers' perceptions of quality, price, service, and reputation (QPSR). It uses a detailed, multi-level approach to measure the relative importance of each QPSR aspect to overall satisfaction.