Wednesday, November 28, 2007

Matching Costs To Savings and Revenue Generated by Technology

A $50,0000 transmitter can be acquired for a monthly payment approximating $980 a month on a 60 month financing arrangement. Dividing that payment by 30 days results in a daily cost of approximately $33 a day. If a new transmitter offers energy efficiency that saves $33 a day then the transmitter pays for itself. If one advertiser places one or two more ad spots a day the transmitter pays for itself. If the transmitter expands the reach of the station so that more listeners and more advertisers join the station the transmitter pays for itself. Radio transmitters, be they analog or digital, whether 1KW or 50KW, have a "useful life" of somewhere between 10 and 25 years. Why not match the utility of the equipment to the timing of savings or revenues generated? This simple method allows the equipment to pay for itself by matching the equipment expense to the natural timing of cash from savings or from ad revenue.

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