Calculate Sales Required

[jandm]

Hello all,,
I am looking for some help in how to calculate the amount of sales i need to break even based on a markup of X%

Example for clarity.
fixed costs = £250
Product Markup = 30%
Sales required to break even = ????

So what is the formula for calculating the sales required in order to break even? I am sure this is very simple but i am really struggling. All the examples i have seen are based on a single fixed sale price per unit. Thank you in advance for your help.

 

[ashakantasharma]

To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit)

 

[Joe4]

Welcome to the Board!

You are missing an important variable. You provided the Fixed Cost, but not the Price Per Unit.
You need that variable also in order to calculate your Break-Even Point.

 

[dcardno]

Without the per-unit values, we cannot calculate the unit volume required to break even. We can calculate the required sales though: a 30% mark-up represents a 23% gross margin (30 / 130 = 23.1%). You will need to develop $250 of gross margin, which will require $1083.33 of sales ($250 / 0.231 = $1083.33).

 

[jandm]

Firstly thank you for the replies, much appreciated.

I have purposely not included a unit cost, simply because i sell more than one item so prices are variable. However the one constant is that i add a 30% markup to virtually all my items. So regardless of what item i sell at whatever price, my gross profit is always 30%

Example:
1 toy purchased for £10 is sold for £13 (30% markup) giving £3 gross profit
2 pens purchased for £15 sell for £19.50 (30% markup) giving £4.50 gross profit
8 candles purchased for £11.60 sell for £15.08 (30% markup) giving £3.48 gross profit

So lets say i need to pay rent of £250 a month (for this example my only overhead) What is the amount of sales i need to make each month to break even. The constant is the Rent and the markup percentage.

 

[Joe4]

Then dcardno already did that for you:

We can calculate the required sales though: a 30% mark-up represents a 23% gross margin (30 / 130 = 23.1%). You will need to develop $250 of gross margin, which will require $1083.33 of sales ($250 / 0.231 = $1083.33).

 

[jandm]

Then dcardno already did that for you:

Yes he did, thank you Dcardno. i think perhaps it's a maths lesson i need more than excel haha. Thank you for all your help everyone it really is much appreciated.

 

[Joe4]

If you are looking for an Excel formula, then if you have the following:
- Fixed cost in cell A1
- Markup % in cell B1
you can use a formula like this:
=A1/(B1/(1+B1))

 

[jandm]

Sorry all, i hope i am not being a pain here, let me ask you this. If i buy a product for £100 and i want to make a 30% profit what is the sales price i need? Or more importantly what is the formula to get that correct sales price?