Business decisions have both tangible and intangible effects on a business, often resulting in quantity vs. quality trade-offs. In some cases, a strategy you pursue can provide qualitative and quantitative benefits -- or disadvantages. Understanding both the objective and subjective ways to look at your operations will help you make better business decisions.

Quantitative Measurements

Analyzing the quantitative performance aspects of a department, product or other area of your business provides you with hard numbers. For example, if you spend $1,000 on a magazine ad and it brings you $5,000 in increased business, your quantitative net gain is $4,000. If you subtract the $500 in costs to create the ad, the return on your investment comes to $3,500. When you subtract your costs to make and sell that $4,000 worth of product, your net profit might only be $1,500. This gives you a 50 percent return on your $1,000 investment.

Qualitative Measurements

When you make a decision to pursue a business activity, you make a choice not to pursue another one. For example, if you purchase a $1,000 magazine ad, that’s $1,000 you can’t spend on website banner advertising, giving an employee a bonus or reducing debt. If your ad provides $1,500 worth of profit, but you lose your employee or decrease her loyalty and productivity, buying the ad has a negative qualitative impact on your business that might be greater than $1,500.

Quantitative Analysis Examples

When you examine the performance of your business, the results of one of your choices or research the impacts of possible business actions you can take, you create an analysis. Analyzing only the objective results helps you compare them against qualitative results. If the quantitative results don’t justify the action, you can skip going any further to determine what the intangible effects will be. For example, raising your prices might reduce your sales. A quantitative analysis will try to determine the net decrease in sales, the effect on profit margins of the revenue increase and the net increase or decrease in your gross profits. This quantitative analysis provides you with an objective look at the effects of the price increase. Comparing your quarterly expenses to your projected budget provides a quantitative analysis of your performance. The same happens when you compare sales projections to actual sales.

Qualitative Analysis Examples

When analyze the subjective results of an action you take, you can determine its overall value to your business. Looking at the intangible effects will help you see the total benefit to your business beyond the dollars. For example, a price decrease might decrease your net profits, but put pressure on your competitor to reduce its prices or lose marketing share. If it lowers its prices, it might have to decrease its quality, reduce advertising or decrease customer service, providing a qualitative benefit to you of being more competitive. Lower prices might also hurt your profits, but can prevent a competitor from entering the market, protecting your sales, revenues and profits. A quantitative financial analysis of your business might show that you are making $X in profits each year and an X percent return on your investment, but won’t show your goodwill, barriers to entry and long-term growth potential based on an growing target customer base.