Making informed decisions with cost-benefit analysis

Prioritizing tasks and managing new ideas are significant challenges for product managers, who can utilize cost-benefit analysis to make objective decisions. This technique, which involves calculating and comparing the costs and benefits of a project, helps ensure data-driven decision-making, debates assumptions rather than opinions, and uncovers hidden costs. An illustrative example compares a checkout optimization project with a partnership opportunity, demonstrating how cost-benefit analysis can guide prioritization based on potential profits versus resource investment. The process includes calculating costs, estimating benefits, comparing results, conducting scenario planning, and making informed recommendations aligned with company strategy and goals. Although cost-benefit analysis provides valuable insights, it is crucial to consider broader strategic objectives when deciding which projects to pursue.