Breakdown of costs
If we look at the schematic that shows the baseline of business by offer
You can see the relative size of the data, voice, and server services, and the number of units managed in each area. It also shows the number of units managed for each area. This will of course vary depending on the features being offered. You can present your offer in gold, silver, and bronze sets of possible plans. Here, for the sake of clarity, let’s assume one average unit price. You can also see the breakdown of personnel and non-personnel costs for each offer. For simplicity, we have assumed the following the assumption in the first year, all offers place 50% of their employees in low cost regions.
In this example, we assume that each delivery employee in the high cost region costs $120,000 per year and in the low cost region costs $40,000 per year. At the bottom of the graph, you can see the key management units per FTE per offer to see the metric. In calculating this metric, we assume that if there are three low cost heads, there will be one high cost head. The baseline for the number of managed units per FTE is an important metric.
Therefore, it is important to set the baseline correctly.