As financial institutions become more sophisticated and client-oriented, they start to offer a range of products. To achieve financial viability, managements need to understand their overall cost-structures and income flows on a product-by-product (and often on a branch by-branch) basis. A clear understanding of an institution’s cost structures is essential in designing appropriate prices for pilot testing new products. MicroSave’s Allocation-based Costing and Pricing of Financial Services toolkit allows the financial institutions’ management to:
Determine the full-costs of delivering products.
Determine the profitability/contribution of the products (including analysis over changes time).
Refine cost/profit centres and the institution’s management information systems.
Identify hidden-costs (especially at a departmental level).
Instil cost-consciousness amongst department managers.
Price current/future products.
Make informed decisions about selection of products (including cost/benefit and marginal cost analysis).
Improve business planning and investment decisions (including which products to market etc.).
