Break-even analysis is a tool that marketers are likely to use during the business analysis phase of the new product development process.
What is break-even analysis explain with examples?
- Break-even analysis is a financial calculation that compares the cost of new business, services, or products to the selling price per unit to determine the break-even point. In other words, it indicates when you have sold enough units to cover all your costs.
- Example: Consider a company with fixed costs of $1 million and a gross margin of 37%. The breakeven point is $2.7 million ($1 million / 0.37). In this break-even example, the company needs to generate $2.7 million in revenue to cover its fixed and variable costs. The more sales you generate, the more profit your company makes.
Why is break-even analysis so important?
Simply put, a break-even analysis helps determine when a business (or new product or service) will be profitable, but the point at which investors will begin to recoup their investment and make a profit.
To learn more about break-even analysis visit:
https://brainly.com/question/28480395
#SPJ4
