The three main

Budgeting methods
by Nicolas Boucher

OUTPUT Activity Based

Top-down approach where you
derive the activities needed (input)
to achieve your targets (output).

For example, to grow by 10%, you need to

INPUT acquire 100 new customers. With a

customer acquisition cost of 5,000$, you
need to plan 500,000$ as customer
acquisition budget.

Zero Based
Every expense needs to be justified.

Budgets are then built around what is

needed for the upcoming period,
regardless of the previous one.

+ Advantage: ideal for cost reduction

- Drawback: time consuming method

Incremental
Take last year figures and add or
subtract a percentage to calculate
your budget.

+Advantage: simple & quick

-Drawback: perpuates inefficiencies/
one-offs & creates budgetary slack

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