When to Conduct a Breakeven Analysis
In business, the Breakeven Point is the point at which revenues equal expenses. As a leader, you are probably already adept at determining when it's a good idea to perform a breakeven analysis. Your team members, however, may benefit from a few helpful reminders.
Share with your team these two instances when calculating the Breakeven Point is useful:
- To Determine if an Idea Is Profitable. Whether the idea in question concerns new products, services or processes, performing a simple Breakeven calculation can help you find out if and/or when it will become a profitable endeavor for your organization.
- To Establish the Best Pricing Structure for Your Products/Services. After you have determined that a particular idea is a good one, conducting a Breakeven Analysis can help you determine the best way to price your products or services in order to yield the most profit.