Enter the total potential revenue of the action ($) and the total cost of the action ($) into the Calculator. The calculator will evaluate the Cost Of Doing Nothing.
Cost Of Doing Nothing Formula
CODN = PR - AC
Variables:
- CODN is the Cost Of Doing Nothing ($)
- PR is the total potential revenue of the action ($)
- AC is the total cost of the action ($)
To calculate the Cost Of Doing Nothing, subtract the cost of the action from the potential revenue of the action.
How to Calculate Cost Of Doing Nothing?
The following steps outline how to calculate the Cost Of Doing Nothing.
- First, determine the total potential revenue of the action ($).
- Next, determine the total cost of the action ($).
- Next, gather the formula from above = CODN = PR – AC.
- Finally, calculate the Cost Of Doing Nothing.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
total potential revenue of the action ($) = 4000
total cost of the action ($) = 1000
Frequently Asked Questions
What is the significance of calculating the Cost Of Doing Nothing (CODN)?
The Cost Of Doing Nothing helps businesses and individuals understand the potential revenue they miss out on by not taking a specific action. It quantifies the opportunity cost and can aid in making more informed decisions.
Can the CODN formula be applied to any type of business or industry?
Yes, the CODN formula is versatile and can be applied across various industries and business models. It is a universal concept that measures the financial impact of inaction, regardless of the specific context.
How can one improve the accuracy of the CODN calculation?
To improve accuracy, ensure that the estimates for potential revenue and the cost of action are as precise as possible. Consider all indirect costs and benefits, and use historical data if available. Regularly updating these figures can also help maintain accuracy over time.
