Multiproducts Breakeven Simulator Free Excel Template.
In many occasions we may need to perform breakeven calculation to determine the quantity that will allow us to start making profits taking into account the unit sale price, the unit variable cost and the fixed costs of a given period of time.
Carrying out an analysis of the breakeven for a single product is very simple, you just have to apply some formulas and present a cool graph to show what amount you need to sell to start earning money.
But the reality is quite different. Very few companies sell a single product, so the question is how to determine the quantity of each product to be sold so that the total gross margin exceeds the company’s fixed costs?
And here not only the quantity to sell of each product comes into play, but also the unit sale price and the unit variable cost.
Usually the company performs the analysis from a series of actual data such as those discussed above, sale price, unit cost, fixed costs … this provides us a view of the current situation, but what we want to analyze with the breakeven are the possible scenarios to make decisions and remain profitable or achieve the expected profitability.
The scenarios can change depending on the variations we make to the unit prices of the products, the unit costs, the sales quantities or the general expenses, for that reason to simplify the scenarios and the analysis, the simulation is carried out through percentage variations of each of these variables with respect to the actual or initial situation.
In this way we can see in a Dashboard and in detailed information of each product the impact that the decisions we make will have on the result of the company.
This type of analysis actually is a direct costing system with forecasts. But it allows us to see what combination of quantities of each product we would need to sell to make a profit.
Obviously we do not want to reach zero profit, we need to overcome the breakeven, so based on my experience, this type of analysis is the one that consultants carry out to make decisions about prices and sales volumes.
This is a base model that you can adapt or take as an example for your own analyzes since each model may have its own needs for decisions making.
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