How Many Do You Have To Sell Before The Season Pays For Itself?
Most seasonal operations know roughly what they want to sell. Far fewer know the number below which the whole season loses money no matter how well it goes.
- Your break-even volume, and how far you are from it right now
- Which lever actually moves that number, worked out on your own figures
- Says plainly when there is no break-even at any volume, instead of showing you a fantasy
- Runs in your browser. Nothing you type is sent to us or saved anywhere
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Price Moves Your Break-Even Almost Three Times Further Than Cost Does
Worked from a CSA with $85,000 of fixed costs, shares at $750 and $220 of variable cost each. Break-even is 161 shares. Here is what a ten percent change to each figure does to that number.
Raise the price 10%, to $825 a share
141 shares
−20
Variable cost rises 10%, to $242 a share
168 shares
+7
Fixed costs rise 10%, to $93,500
177 shares
+16
Drop the price 10%, to $675 a share
187 shares
+26
Twenty shares against seven. Price lifts the margin on every unit at once, which is why it moves the number so much further than trimming input costs can. The tool runs this on your own figures, because the ratio changes with your cost structure and it is worth knowing yours before you decide to chase volume.
Four Figures, One Of Which People Understate
Pick whether you are counting shares, boxes, subscriptions or animals. The wording changes, the arithmetic does not.
01
Fixed costs for the season
Land, insurance, equipment, utilities, year-round labor. And your own pay. Leaving that out is the most common way this calculation comes out wrong, and it always comes out wrong in the flattering direction.
02
Price per unit
For the whole season, not per week.
03
Variable cost per unit
Only what rises when you add one more: seed, packaging, fuel, the extra hours.
04
How many you have sold
Optional. Leave it blank if you are planning rather than mid-season.
Out
Break-even, and the gap
The volume you need, the revenue that represents, your position against fixed costs, and what your fixed costs burn per week.
Plus
Which lever moves it
Price up or down, variable cost up, fixed cost up. On your figures, not ours.
Useful if
- You sell a season in advance: CSA shares, meat boxes, subscriptions
- You are setting next season's price and want a floor to work from
- Sign-ups are slower than last year and you need to know if that matters yet
- You are deciding whether to keep a route, a market or a product line
- You suspect you are busy rather than profitable
Probably not, if
- Your revenue is even across the year, in which case a straight margin review is more use
- You have several very different products with separate cost structures. Run it once per line rather than blending them
- You want a full enterprise budget. This is one number, not a plan
13 weeksrolling cash flow built for Homestead Farms
A client this applies to
“It’s almost like therapy. When you’re feeling overwhelmed, you need somebody professional to talk to. There was no judgment whatsoever.”
– Luke Howard, Owner, Homestead Farms
After a $2.4M poultry purchase, we worked the finances enterprise by enterprise and planned a gradual wind-down of the vegetable operation that was not justifying its labor. Deciding to stop doing something is what a break-even number is for, and it is not a comfortable conversation to have alone.
Read what happened