Marketplace Simulations: Estimating Costs For Your Business Model

This microsimulation is designed for courses that cover new venture development, small business, start-ups, business plan development, venture feasibility, or business models. It requires a basic understanding of how to build MBV models for start-ups. Marketplace microsimulation: Assessing the Profitability of Your Business Model introduces this concept and pairs well with this exercise.
Students learn how to estimate the costs of starting and operating a business. They use these estimates to build a Margin-Burn-Volume (MBV) model and determine whether their venture can be profitable.
Taking on the role of entrepreneurs starting a furniture manufacturing company, students identify the costs involved in starting and operating a business that produces and sells stylish rocking chairs. They organize those costs into three categories: Start-up Costs, Direct Costs, and Fixed Overhead, or Burn.
Using these inputs, students build an MBV model to calculate Margin per Unit, Volume to Break Even, and Operating Profit. The exercise culminates in a business challenge: the entrepreneurs do not have enough capital to cover all initial start-up costs. Students must apply their understanding of cost categories and the MBV model to explore how certain expenses can be spread over time rather than paid upfront. They then evaluate how these choices affect profitability and whether the venture can still succeed.
Developed by Marketplace Simulations and Dr. David Newton—a university professor with 28 years of teaching experience in strategy, finance, and entrepreneurship—the microsimulation draws on his 40 years of consulting experience with more than 500 early-stage ventures. Animated instruction, practical challenges, and an engaging storyline connect business concepts with real-world decision-making.
Estimating Costs for Your Business Model is part of the Marketplace microsimulation ecosystem. Each concise, visually driven, self-paced microsimulation is a stand-alone microlearning exercise focused on one topic. Microsimulations can be assigned before class in a flipped classroom model, or used during class to prompt discussion. When bundled together, they can be scheduled to align with relevant course content.
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