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THE RULE OF 78s
A rule of thumb used as a shortcut to calculate the impact a monthly change in recurring revenue (or cost) will have within a budget year.
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In-Year Impact & Starting Month
If we assume cost reductions are evenly spread throughout the year, a cost reduction executed the first month of the year will recur 12 times; a cost reduction executed the second month of the year will recur 11 times, and so forth.

If you add all these up, (12+11+10+9+8+7+6+5+4+3+2+1), you get 78.
Thus, if a project that runs all year long is expected to reduce netex by $2K per month, the in-year cost savings from that project will be $156K ($2K x 78).

Similarly, if sales are expected to be $4K per month, the in-year revenue from those sales would be $312K ($4K x 78).
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Want to read more?
Here is a helpful blog and infographic from Wingmate.
While the discussion on the blog is applied to sales, as discussed, the same principle applies to reductions in any recurring cost.

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