Finally, we can easily build a sensitivity matrix to explore how these factors interact. Given various cost structures, we can see a range of break-even prices from $28 to $133. We demonstrate the calculator because it better conforms to financial modeling best practices stating that formulas should be broken out and auditable. Please note that this can be either per unit or total or expressed as a percentage. Company V now knows it needs to sell $160,000 worth of vacuums to break even on its quarterly investment. That being said, their contribution margins on gaming pass subscriptions, accessories, and games are much, much higher. They break even on the consoles, but have incredibly high contribution margins on the games, which yields a net profit overall. Knowing how much you need to charge in order to make a profit will make all the difference in your business’s potential growth and scalability. The final component of break-even analysis, the break-even point, is the level of sales where total revenue equals total costs. Companies typically do not want to simply break even, as they are in business to make a profit. Break-even analysis also can help companies determine the level of sales (in dollars or […]