You will not Everything to the right and above is profit. It turns out that at this very point, profit will be zero. How the break-even point is calculat and us in practice At the beginning of the article, we mention in general terms what the breakeven point is for and what it shows. Next, we will learn: what to do after we have manag to find the breakeven point.
Estimate on what day of the month
The company reaches the breakeven point If the company portugal phone number library reaches the break-even point in the middle of the month, this is a good indicator. If later, then this is a risk for the business. In the case of long downtimes and force majeure circumstances, all the invest funds. In the example, the company reach the breakeven point late, which means the risks to the business are too high. 2. Next, analyze all your expenses.
Break-even point analysis allows
You to understand at what plann price of goods and at what volume of production the business will be able to recoup the project expenses . And if after the calculations you are not satisfi with the final indicator, then you should improve one of these parameters. It is worth starting with a detail study of the cost model. The breakeven point will help you identify the structure of your fix and variable costs. Their ratio can be vari depending on the situation and profitability of the business.
For example, in difficult times
You can ruce fix costs and increase variable costs faster. A some examples of techniques are striking example is the coronavirus pandemic. At that time, many companies suffer losses. And in order to somehow ruce costs, many companies could: If the company itself and production volumes are growing, you manage to earn a profit, then it is worth doing the opposite. Increase the share of fix costs and try to ruce variable ones. With a large production volume, this is more profitable.
Estimate the selling price of the product
The price of the product is an equally important factor that buy lead affects the break-even point in money. Perhaps the price may be too low or, conversely, too high. And this is where problems arise. In this case, you ne to organize various marketing research, better study your target audience, its nes. You should find out what pricing policy your competitors have.
