What is revenue? Product or service?
What is COGS?
What is overhead? What do you think in the schools overhead?
Break Even Analysis: How many products do you have to sell to break even (not lose money, not make money)
Problem: take a product, mark it up (charge more for it than you paid for it). Then calculate your overhead. Rent, insurance, electricity, and employees. Rough numbers are okay.
What is your break even analysis? Add up the monthly fixed costs. Decide how much to charge, and subtract your cost (what you paid for it), this will equal your gross profit per item. Then divide your total monthly costs by the gross profit per item. This will tell you how many items you have to sell to break even.
Problem: take a product, mark it up (charge more for it than you paid for it). Then calculate your overhead. Rent, insurance, electricity, and employees. Rough numbers are okay.
What is your break even analysis? Add up the monthly fixed costs. Decide how much to charge, and subtract your cost (what you paid for it), this will equal your gross profit per item. Then divide your total monthly costs by the gross profit per item. This will tell you how many items you have to sell to break even.
BREAK EVEN ANALYSIS EXAMPLE
Fixed Monthly costs
Rent /or website costs
Insurance
Utilities
Employees
Marketing
Misc.
____________________________________________
=TOTAL Monthly expenses
GROSS PROFIT
How much are you going to charge?
Minus Your COGS (cost of goods sold) per unit
___________________________________________
= your gross profit per item
Total monthly expenses divided by your gross profit per item = how many items you need to sell to break even
Fixed Monthly costs
Rent /or website costs
Insurance
Utilities
Employees
Marketing
Misc.
____________________________________________
=TOTAL Monthly expenses
GROSS PROFIT
How much are you going to charge?
Minus Your COGS (cost of goods sold) per unit
___________________________________________
= your gross profit per item
Total monthly expenses divided by your gross profit per item = how many items you need to sell to break even