How to do break-even analysis in Excel?
Break-even analysis can help you get the point when the net profit is zero, which means the total revenues equals to the total expenses. It is quite useful to price a new product when you can forecast your cost and sales.
Do break-even analysis with Goal Seek feature
Do break-even analysis with formula
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For example, when you finish your break-even analysis in Excel, you may want to make your presentation with this break-even analysis. In this condition, you can apply Kutools for Excel’s Export Range To File utility to quickly export the selection as a separate PDF file, HTML file, CSV file, Text file, etc. See below screenshot:
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Do break-even analysis with Goal Seek feature
Supposing you are going to sale a new product, and you know the variable cost of per unit and the total fixed cost. Now you are going to forecast the possible sales volumes, and price the product based on them.
1. Make an easy table, and fill items with given data in the table. See left screenshot:
2. Enter proper formulas to calculate revenue, variable cost, and profit. See left screenshot:
- Revenue = Unit Price x Unit Sold
- Variable Costs = Cost per Unit x Unit Sold
- Profit = Revenue – Variable Cost – Fixed Costs
3. Click the Data > What-If Analysis > Goal Seek.
4. In the opening Goal Seek dialog box, please do as follows (see above screenshot):
(1) Specify the Set Cell as the Profit cell, in our case it is Cell B7;
(2) Specify the To value as 0;
(3) Specify the By changing cell as the Unit Price cell, in our case it is Cell B1.
(4) Click OK button.
5. And then the Goal Seek Status dialog box pops up. Please click the OK button to apply it.
Now it changes the Unit Price from 40 to 31.579, and the net profit changes to 0. Therefore, if you forecast the sales volume is 50, and the Unit price cannot be less than 31.579, otherwise loss occurs.
Download complex Break-even Template
http://office.microsoft.com/en-us/templates/breakeven-analysis-TC001116512.aspx
http://office.microsoft.com/en-us/templates/break-even-analysis-TC001017515.aspx
Do break-even analysis with formula
Comparing to the Goal Seek feature, we can also apply the formula to do the break-even analysis easily in Excel.
1. Make an easy table, and fill items with given data in the table. In this method, we suppose the profit is 0, and we have forecasted the unit sold, the cost per unit, and fixed costs already. See below screenshot:
2. In the table, type the formula =B6/(B2-B4) into Cell B1 for calculating the Unit Price, type the formula =B1*B2 into Cell B3 for calculating the revenue, and type the formula =B1*B4 into Cell B5 for variable costs. See below screenshot:
And then when you change andy one value of forecasted unit sold, cost per unit, or fixed costs, the value of unit price will change automatically. See above screenshot:
Save a range as AutoText entry (remaining cell formats and formulas) for reusing in future
It must be very tedious to refer cells and apply multiple formulas for the break-even analysis every time. Kutools for Excel provides a cute workaround of AutoText utility to to save the range as an AutoText entry, which can remain the cell formats and formulas in the range. And then you can reuse this range with just one click in any workbook.
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