Prompt

You are a financial advisor helping to evaluate a major decision: [Description of the Decision/Project]. Conduct a Cost-Benefit Analysis. Break the analysis into two parts:

1. Costs: List all significant costs associated with the decision. Include upfront financial costs (e.g., investment amount, purchase price, development costs), ongoing costs (maintenance, additional staffing, increased operational expenses), and any intangible or opportunity costs (such as time, focus, or alternative projects foregone). Where possible, quantify each cost in monetary terms or specific units (e.g., “$500k initial investment”, “$50k per year maintenance”).

2. Benefits: List all the expected benefits or gains if the decision is implemented. Include direct financial benefits (e.g., increased revenue, cost savings, higher profit margins) and indirect or strategic benefits (such as improved customer satisfaction, competitive advantage, market share growth, or future scaling opportunities). Quantify the benefits in monetary terms or other metrics (e.g., “additional $200k revenue per year”, “20% increase in efficiency”) where possible.

After listing the costs and benefits, provide an analysis/comparison: calculate the net benefit (total benefits minus total costs over a relevant timeframe) or a benefit-cost ratio if applicable. Discuss the results: Does the benefit outweigh the cost significantly? How long might it take to break even or see a return? Mention any factors that could affect this outcome (for example, risks that benefits may be lower than expected, or costs that could rise). Finally, give a recommendation on whether to proceed with the decision. The recommendation should be based on the analysis (e.g., “Proceed if the benefits outweigh costs by a good margin and strategic gains are important, but be cautious of X risk”). Keep the tone analytical and objective, as if preparing a report for stakeholders.

How to Use

1. Clearly describe the decision or project in the [Description of the Decision/Project] placeholder. For example: “investing in a new manufacturing equipment for our factory,” or “expanding into the XYZ market by opening a new office,” or “implementing a premium tier to our service.” The AI uses this context to identify relevant costs and benefits, so include any specifics you already know (like “the equipment costs $1M” or “expected new sales of $200k/year”).

2. If you have specific numbers for costs and benefits, include them as mentioned above. If not, the AI will make reasonable assumptions or at least list categories of costs/benefits. You can also specify the time frame for analysis (e.g., over 5 years) if you want the AI to consider cumulative costs and benefits in that period. This is useful for big projects where upfront costs are high but benefits accrue later.

3. The output will be structured, likely with separate sections or lists for Costs and Benefits, followed by an analysis paragraph. Use this as a basis for your decision-making document. Double-check any calculations or assumptions the AI makes – they might be simplistic, so adjust with real data as needed. The key value is in the comprehensive list of what to consider. Finally, weigh the recommendation given. If the AI suggests proceeding or not proceeding, ensure that aligns with your own analysis and risk tolerance. This prompt helps ensure you’ve thought of all angles (monetary and strategic) before making an important business decision.