How much you must sell.
WHAT IT MEANS
The sales volume at which you cover all your costs.
Below it you lose money. Above it you make it.
THE CALCULATION
Your monthly overheads, divided by the contribution each sale makes after direct costs.
That is how many sales you need.
WHY IT IS USEFUL
It converts pricing from a feeling into a number.
If you need three hundred sales a month and you make fifty, something must change.
WHAT CAN CHANGE
Price Volume Direct costs Overheads
WHAT PEOPLE TRY FIRST
Volume, usually.
Frequently price is the easier lever.
THE PRICE LEVER
A modest price increase raises contribution per sale substantially, because overheads do not change.
WHAT TO CALCULATE
Your break-even at your current price, and at a slightly higher one.
The difference is usually surprising.
WHAT TO REVIEW
Whenever costs change.
