Overview

Break-even Analysis – how many units/services you need to sell to start getting profits?

Break-even analysis is an important tool for project owners and financists to determine the minimum target volumes for a new project or business. The analysis will show you how many products/services the company should sell to cover its costs. Moreover, it provides you with the ability to split the costs between Cost of Goods Sold (COGS) and Selling, General & Administrative (SG&A) costs. The model will also provide calculations to choose the optimal price level depending on the number of units sold.

The model is a perfect fit for corporate presentations and Board meetings since you can quickly evaluate decisions and “play” with inputs to find the right way of development. It is also applicable to determine the minimum required target for your business. The model does not substitute the real project plan though, hence, if you need one, contact us at [email protected]

Functionality of the financial model:

  • Base Case Scenario with existing levels of inputs (Price, Units sold, COGS as % of Sales, etc.);
  • possibility to include Financing costs in the Break-even analysis;
  • breakeven analysis derivations depending on changing variables such as Units Sold, Average Price, COGS, & SG&A costs;
  • break-even chart with fixed, variable and total costs, and sales;
  • sensitivity analysis to determine the optimal price of a product/service;
  • sensitivity analysis to see extreme points of COGS as % of Sales given the sales volume;
  • sensitivity analysis of SG&A expenses to COGS;
  • ability to play with inputs to find out the right scenario.
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