This tool helps you calculate your break-even point for a project. The calculator takes into account the number of hours required to make an item, the cost per hour and how many items can be made in a day.
How should a business plan and raise funds for its start up? This is where the Bplans break-even analysis calculator can help. It will show you how many investors you need, what your total cost of capital would be, and other important financial data to complete this task.
The “break-even analysis excel” is a calculator that can be used to determine the break-even point of an investment. This tool is great for businesses who want to know how much money they need to make in order to recoup their initial investment.
Break-Even Point Analysis is a basic formula that allows you to figure out how much you need to sell each month or year to pay your operating expenses – your break-even point. You’re losing money if you don’t reach this sales threshold. You have a profit over it.
Let’s say you’re selling boxes of candy bars for $1 apiece, and each candy bar costs you 30 cents to purchase. So you have 70 cents left over for each candy bar you sell – that’s your gross margin. However, you have fixed expenses that stay constant regardless of sales level — in this instance, $10 per month for candy bar storage.
To pay the $10 storage charge, the Break-even Analysis indicates that you’d have to sell 14.3 candy bars each month. Isn’t it simple? Except for selling a third of a candy bar, which we’ll classify as a marketing challenge. You may also sell one leap-bar every three months.
Benefits The Break-even Analysis provides a fast reality check on your company’s statistics. If you’ve done your homework and made some educated estimates about how much you can sell each month, your break-even point will indicate whether or not you’re on track. You may also use it to play around with other scenarios: what if your direct expenses are a little lower, or if you can negotiate a better deal with a supplier? What happens if your operational costs go beyond budget in the worst-case scenario?
Because most start-ups will lose money for the first few months until word-of-mouth or other marketing efforts begin to produce greater sales, the break-even point tells you where you want to be. How long will it take for things to start turning around and become profitable?
Although one use of the Break-even Analysis is to demonstrate this figure to investors, it isn’t the purpose here. This formula may assist most businesses think through their budgets and sales strategies, allowing them to concentrate on the areas that truly matter to the bottom line.
Dangers Only earnings, not cash, are included in the Break-even Analysis. If you have to purchase those candy bars before you can sell them, you may run out of cash and end up with a lot of inventory (of course, in this example, you can probably pay your sales boys in candy bars and eat the profits).
Keep in mind that this is only one example of a simplified computation. To obtain a complete view of your company’s finances, create projected profit and loss, cash flow, and balance sheet statements. All of them are connected and financially solid in Business Plan Pro.
The calculator itself is simple to use. Simply double-click in the left-hand input boxes and enter a number for each field.
Per-Unit Average The amount you charge per unit for what you’re selling is referred to as revenue. It’s up to you whether a unit is a single candy bar, a box of candy bars, a haircut, or an hour of advising time.
The average per-unit cost refers to the cost of producing, purchasing, shipping, and delivering that unit of products or services. It’s a direct expense, which means you don’t have to pay it if you don’t sell the unit. In our example, the direct cost is the 30 cents you pay for each candy bar, but if we were manufacturing them ourselves, the direct cost would be cocoa butter and powder, sugar, wrappers, and paying the workers a per-bar fee. Direct expenses may not be as important in a service company unless you pay your workers commissions.
The term “estimated monthly fixed cost” simply refers to the amount you must pay each month even if you do not sell anything. This is the $10 storage cost in our case. Payroll, utilities, rent, pre-arranged advertising, and other regular expenses are likely to be included in a genuine business’s budget.
The graphic on the right of the calculator will update as you alter the values on the left to indicate how many units and what real income level you need to break even. Your break-even point is when Profits = $0 on the chart.
The “how to calculate break-even point in units” is a calculator that helps users to determine the break-even point of their business. The calculator will help you determine how many units it would take for your company to break even.
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