We developed a simulation model to determine the breakeven cost of track and trace (T&T). The model determines the price of a T&T marker (such as a tax stamp) that sets additional revenue from T&T equal to the total cost of setting up and operating T&T. This means that a government would fully recovered its T&T expenses by collecting additional tax revenue. If the price of a marker is lower than the breakeven estimate, the T&T system would generate additional revenue.
This Excel-based model uses basic economic principles and is easy to operate. We created a three-stage, Excel-based simulation model for South Africa, but the model can be customised using data from any country.