Cost-benefit analysis is a monetary evaluation method, where the expected costs are weighed against the expected benefits for one or more topics, so that the most advantageous solution can be chosen. For example, the analysis may include calculations of initial and expected yield. For example, a product manager can compare costs for production and marketing relative to expected sales of a particular product. Based on this consideration, the inclusion of a product can be taken in the assortment.
In general, investment to improve processes is also taken with the help of cost-benefit analyzes. Analysis based on return on investment also helps in this decision-making process. A difficult part of the cost-benefit analysis is quantifying (monetarizing) aspects such as loss of reputation, offering a complete product package, long-term strategy, and so on. The analyzes are made much in the private sector, but also in the public sector, such considerations are made. One example is the real estate development by a municipality. The cost-benefit analysis is also used for Buy / Make decisions.
In the case of social cost-benefit analyzes (SMEs), the external effects are also included in the evaluation. For example, MKBA was used to compare development variants of the Wieringerrand lake. Therein also the natural benefits were monetaryized. Also see
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