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Break-even and price rise calculator
Your figures, a month
| Sales needed to break even | – |
| Profit now | – |
| Profit after the price rise, same sales | – |
| Extra profit a year | – |
| Sales you could lose and keep the same profit | – |
Sales are before VAT. The price rise assumes your direct costs stay the same.
How it is worked out
- Break-even sales are overheads divided by the gross margin.
- Profit is sales multiplied by the gross margin, less overheads.
- After a price rise, sales go up by the rise and direct costs stay the same, so all of the rise is added to profit.
- The sales you could lose are the share of customers or jobs that could go before profit falls back to where it is now: one less the margin divided by the margin plus the rise.
Questions
What is gross margin?
Sales less the direct costs of making them (materials, stock, subcontractors and the wages of the people doing the work), as a percentage of sales. Your management accounts show it.
What counts as overheads?
Costs you pay whatever you sell: rent, office wages, insurance, software, vehicles and finance costs.
Where can I get help with pricing?
Cash flow and profit improvement is a one-off meeting on your five profit levers, price first. Financial coaching works through pricing and margin every month.
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