Firstly lets look at the terms used in this post: The Break-Even point in sales volume is defined as: “ That point in sales volume, or revenue, where direct costs have been recovered, fixed overhead expenses have been absorbed and where profit begins” Contribution is the SALES less VARIABLE COSTS Contribution is so called as it [...]
In every business there is a certain level of sales at which costs equal profits. This is know as the break-even point. Its simple to calculate and can be plotted on a break-even chart. Lets assume an event firm is running a champagne reception. The selling price per ticket is €10. Each guest gets one [...]
Sometimes in business we ignore the small things. A tiny overcharge on an invoice, a few euros off on the VAT but these small things can become material. Today while working with a client I phoned one of his suppliers to get an €8 delivery charge removed from an invoice. This might seem very small [...]
A large part of my work involves providing management with information allowing them to make strategic decisions. I will provide a case study here which shows the benefit of that information: One of my clients runs a distribution business supplying cleaning equipment, When I first arrived at this client her revenues were declining and profit margins were being [...]
Working with clients I see them using all sorts of creative ways in trying to develop their sales price. Sometimes using mark up and margins sometimes licking their finger and holding it out the window. Calculating a selling price using a gross margin is relatively simple = cost / (1-Gross Margin%) yet it still manages [...]
Fiddaun
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Galway
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