Watch This · Module 04 · My Product

How to Perform a Break-Even Analysis

Peter Thorsson, LivePlan’s senior director of sales (he also teaches management at the University of Oregon) · 6 min

Module 4 · Lab 4.1 — once your price and costs are in

Why this video

The number this module has been building toward: price minus the cost of each sale is what every sale contributes; divide your fixed costs by it and you know how many sales — and which month — until the losses stop. Mason's board contributes $9.50. Run it on yours.

What to watch for

Contribution margin = price − variable cost. Write yours down while he talks.
Fixed costs ÷ contribution margin = units to break even. Then ask: how many months is that?

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Video by LivePlan (Palo Alto Software), played here from YouTube in privacy-enhanced mode. If the player doesn't load, watch it on YouTube. Build Your First Business is published by Family Aspirations and is not affiliated with LivePlan.