Tuesday, 20 October 2009

Review Break Even

The Break Even discribe this point which you need to achieve for make no loss / no win.

The Break Even is calculatet through the fixed costs* divided by the unit contribution*.

For calculate the unit contribution you need to subtract the variable costs* from the selling prise*.

But I think it is more intressting to know how much is your profit.
Therefor you have to subtract the total costs* from the total revenue*

The constribution is the selling price* minus the variable costs*


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fixed costs = all what not change (rent, light)
variable cost = costs which can change (materials)
unit contribution = profit from each single product
selling price = price from the product
total costs = all money which you need
total revenue = all money you earn by selling your products