Price breakeven calculator
Business economics tells us there’s a trade off between prices we charge for our products or services and the number of customers who will want to buy from us. Reducing prices may bring us more customers but at lower margins. Conversely, increasing prices may reduce how much we sell but we will make more profit on each sale.
If you’re considering growing your business by cutting prices to attract more customers it’s important to know how much extra you need to sell to increase your profit. It may be more than you think! There’s an example involving lemon drizzle cake in my recent article The Midsomer margin killer.
The calculator below will help you answer that question. You can use it for a single product or for your whole business. Simply enter your current sales value along with the related variable costs – that’s the costs that vary according to how much you sell – and then play around with the sliders to see the effect of different price reductions.
This is a cut down version of a much more powerful tool that we use to help you explore the profit potential of your business. If you’d like to know more about how our packages of advice, training and support can help you build a much more profitable business we have a number of free resources you can download.