What is: The break-even point of a product is the specific amount that must be charged to sell it and cover all production costs and overheads, achieving a fair profit margin.
Why do: Unfortunately, it is quite common to see entrepreneurs starting their careers closing their doors before completing the first 12 months of existence. One of the most frequent reasons for this is the lack of information from these entrepreneurs on basic aspects such as the PE - Balance Point - responsible for, in a nutshell, to centralize information about which monthly minimum turnover your company to cover both fixed and variable costs and to remain sustainable.
In this way the PE helps the entrepreneur to know how much their production needs to be high, so that it can reach the referred point of balance of his finances in the company - both in terms of financial volume and quantity of production. If you are within this profile, you will be in the profit zone, below that, in the loss zone.
Point of Balance with various products: learn how to find out
To help calculate and find the break-even point of a company with several products will need to find a spreadsheet that relates them, dividing them into territories, with their particular prices and costs, as well as advertising and transportation expenses at each location.
So if you are a business owner and need to know how much to sell to be profitable - even though you are unaware of meanders about fixed and variable costs, sales, among others, you just need to know the great Point of Sale Calculation Worksheet in its 3.0 version.
With this special, detailed spreadsheet, you will be able to have a clear idea of how best to analyze both fixed and variable costs and sales. This way you will be able to stay in the profit zone without difficulty and with the application of good business planning.
The big advantage of the 3.0 version of the Balance Point Calculation Worksheet is the fact that it works for multiple products; so now is the chance you needed in order to start thinking about the break-even point by relating all the products or services offered by your venture!
By acquiring this Balance Point Calculation Worksheet you will be able to easily generate analysis charts of all fixed expenses; make the calculation of the percentage to which each product responds, within the context of the company's billing. The weighted contribution can also be obtained from the spreadsheet, with each product analyzed specifically, as well as the mix of products to be marketed.
Using the Worksheet
To make the analysis of how your company can reach the balance of your finances with more than one product, it is important that you know how to fill each part. On the Home tab, general instructions and a complete tutorial will be given on how to fill in the various tabs of the worksheet.
In the general assumptions you will register each of your products, with clearly broken down values (sales price) and sales projections, as required in each cell of the table. This will generate your projected monthly gross revenue and the% share of each product. These values will be essential for break-even analysis.
In the second tab of the premises, it will be necessary to fully record the direct (variable) expenses of the products. We have already separated some fields such as raw materials, commissions, direct taxes and other expenses. This calculation will generate the total cost per product, which will provide the account of the individual contribution margin of each one.
Following the use of the spreadsheet, we arrive at the contribution margin. For this part, the worksheet will ask you for information about your company's fixed cost. The other information will be given automatically, after the projections are entered. Here you will see:
- Average selling price of products
- Average contribution margin of products
- Total direct costs
- Average direct costs per product
- Break-even data of the company
Finally, in the balance point tab by product, you can consult, in a practical and clear way, the break-even point for each product. With these data, analyzes can be made to pursue this goal.
There is also, for further understanding of the spreadsheet, a unique tab for comparative analysis with competitors and top products.
The following bonuses are also included with the 3.0 Balance Point Calculation Worksheet:
- A version of the Balance Point Calculation Worksheet ready for editing;
- Another version of the Balance Point Calculation Worksheet, as a template, so you can do the step by step of your document, without errors;
- Full compatibility with Excel;
- Graphs explaining the results of the worksheet;
With this type of advantage and ease, obtaining positive results from your venture will be a matter of time. Soon, soon, you will have great news and you will be able to transform your dream of enterprise into a sustainable reality, and even more: lucrative!
Did you see how important it is to do this calculation? LUZ.vc has developed a Point of Equilibrium Calculation Worksheet to assist you in this task. Get it now and set the perfect price for your products!