Chapter preview · Arc VI — Compounding Advantage
Chapter 20 — Make the Math Work
The financial toolkit before the business-model arc
Contribution margin, break-even, cost of capital, and NPV – the tools a hardware product manager needs to evaluate any business-model decision, including the recurring-revenue, customer-lifetime-value, and platform-economics decisions of the next three chapters.
Hardware companies fail in two ways: a fast bankruptcy or a slow one. Both come from the same cause – the unit economics, the multi-year payback, or the opportunity cost across competing bets was never run, or was run wrong. By the time the cash runs out, the calculator has done the work the team didn't.
Chapter 19 closed with a four-axis lifecycle action plan – functionality, maintainability, end-of-life, and data – that binds a connected-hardware company across a device's full life. Each commitment is a line item in one of those calculations. This chapter is the calculator behind them.
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