I want to calculate: How much money I have for each dollar invested in each product of my portfolio. For example, each 1 dollar I invest in one product, I have 1,25 dollar. It can be the ROI, or profitability. But, the problem is: I have a Initial Investiment and as any IT product, I must keep investing more for new releases and updates. So, I have a timeline table by months, and I must calculate profitability for each month separately and acummulated profitability. I don't know what I consider to calculate it. I have already some informations: Month Result, accumulated results, developing costs, commercial costs, marketing costs, taxes costs. How can I manage all this costs and investiments to have what I want? Thank you

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    Welcome to PMSE! From an accounting perspective a lot depends on the accounting practices adopted by the company. Items like development costs may be amortized over a longer period of time than one month or one year, as with marketing costs, etc. Ask the company accountant or do deeper research on the accounting rules your organization uses in your area. – Mark Phillips Apr 8 '14 at 9:34
  • We consider now net profit or the result = revenue - (dev costs + commercial cost + marketing cost + product cost + support cost). All in average budget for each product. So my doubt is if I should consider or not this cost and how calculate it. – user3446267 Apr 8 '14 at 13:50


Most projects deliver features or value (however the organization defines value for itself), but projects are unlikely to generate profit directly. Generally speaking, profits can only be generated once a shippable product is released into a sales channel, and the revenue from the sold product exceeds its associated costs.

Track Value Instead of Profit

While there are certainly exceptions, such as projects that have rolling releases directly into a sales channel, most projects are a cost center rather than a profit center. It rarely makes sense to track "profit" month-to-month on something that has not yet been fully built.

Instead, many projects use Earned Value Management, where the project periodically "cashes out" earnings as defined by the project's Planned Value in accordance with predefined rules. Planned Value could conceivably be used as a proxy for potential profit once the product eventually ships, but that isn't really using the methodology to best advantage.

Other frameworks such as Scrum focus on iterative delivery of potentially-shippable features. Assuming you ship monthly and tie your sales earnings to specific monthly releases, you could use those numbers retroactively to identify profit or loss for each iteration. However, iterations generally have a short fixed duration (e.g. one month), while sales generally follow a longer cycle and often have a long tail. I suspect that trying to tie sales to each tagged release will cause most of your iterations to represent a "loss," at least on paper, but your mileage may vary.

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  • Understood. Here, we launch product versions. So, you suppose I should consider the proffit of each version. For example, 2.0, 3.0, 4.0...? Just for you to know, we launch versions when laws changes, so not always we launch features or value provided, just a cost to maintence the product updated to contract customers. So I should consider this new releases as a cost and not investiment? – user3446267 Apr 8 '14 at 13:42
  • @user3446267 Yes, I would consider compliance-related work to be a cost, not an investment. Your accounting department may have its own unique definitions, but a Product Manager (or Product Owner) would be better off simply treating it as a cost. – Todd A. Jacobs Apr 8 '14 at 18:42
  • I solved the following question with this: Just sum the initial investiment to build the whole product until launch it. Then for each month I divide the net profit or earnings discounted costs per initial investiment ajusted for opportunity tax. – user3446267 Apr 9 '14 at 11:37

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