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Glossary

Every term this site uses, defined without assuming finance knowledge.

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Money and returns

Profit per unit — what you keep on one item after every cost.

Profit per hour — what a building earns while it runs. The number that matters most.

Margin — profit as a percentage of the sale price. A measure of cushion, not of quality.

Break-even price — the sale price at which profit is exactly zero.

ROI — return on investment: what you got back as a percentage of what you put in.

Payback period — how long an investment takes to earn back its cost.

Opportunity cost — the profit you gave up by choosing this over the best alternative.

Working capital — money tied up in stock and running costs rather than available to spend.

Production

Input / material — something consumed to make something else.

Output — what a production line produces.

Recipe — the set of inputs and quantities needed for one unit of output.

Throughput — units produced or sold per hour.

Administration overhead — a percentage that multiplies your wage bill, rising with company size.

Vertical integration — producing your own inputs instead of buying them.

Bottleneck — the step in a chain that limits everything downstream.

Markets

Order book — all the open offers for a product.

Depth — how many units are available near the current price.

Liquidity — how easily you can buy or sell without moving the price. We score it 0–100 from depth and the number of sellers.

Volatility — how much a price moves about, as a percentage, so different price levels compare directly.

Spread — the gap between the cheapest and dearest current offers.

Quality — a product’s grade. An offer satisfies any requirement at or below its quality.

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