Customer Profitabilty Analysis

CPA: specific customers or classes of customer. If a unique service or product is offered, it would be possible to track costs using invoice coding and time sheets (like contract accounting). For mass produced items, it might still be possible to do a CPA. For example, a publisher of books would be able to make a reasonable attempt off working out the cot of producing books for use in schools compared to producing books for university students. The publisher might decide that one or other sector was not worth continuing with.

Customer life cycle and product life cycles are linked because the customers buy the products. What tends to happen at the later stages id that there is greater competition from suppliers, a customer base that’s not growing and knowledgeable customers. Those factors could turn a previously profitable sector into an unprofitable one.