 # Break Even Analysis Example

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This section is created to see the financial aspect of the marketing plan. We will consider break-even analysis, sales forecasts, expense forecast in order to meet the marketing strategy.
Break-even analysis determines the point at which revenue received equals the costs associated with receiving the revenue. Break-even analysis calculates what is known as a margin of safety, the amount that revenues exceed the break-even point. This is the amount that revenues can fall while still staying above the break-even point.
Expense forecasts are mostly for staff required to do the marketing activities such as advertisements, web site developments, providing printed materials.
4.1 Break-Even Analysis
The break-even analysis for iLoveMyWater shows that \$6,928 will be required in monthly sales revenue or 347 units (Table 4.1) to reach the break-even point where profits equal zero.
TABLE 4.1Break-Even Analysis
Break - Even Analysis Parameters
Monthly Units Break-Even 347 units
Monthly Sales Break-Even \$6,927.59
Per Unit Average Revenue \$19.99
Per Unit Variable Cost \$3.60
Estimated Monthly Fixed Cost \$5,680.00

We computed these break-even parameters based on assumptions on variable costs, fixed costs (Table 4.1) and used the following formula:
Price x Units – Variable Cost x Units – Fixed costs = Profit; or