How to reach the break-even point in a company
Posted: Mon Dec 23, 2024 4:19 am
Now that you know how to calculate the break-even point, comes the hard part: reaching it and having a profitable business.
For all start-up companies, the top priority should be to reach the breakeven point. This can only be achieved in two ways: either you increase your revenues, or you reduce your expenses.
Let's take a look at some techniques to get you closer to profitability:
#1: Raise prices
It's the main strategy to be able to reach the break-even point. And many times, it's as simple as it sounds-- if you want to earn more, sell more expensively.
The problem with raising prices is that it's a difficult task--your customers will never want to pay more for the same thing, and your competitors will take advantage of that.
In order to raise prices sensibly, it is very important to know the value your product brings and where you are positioned. Ask yourself the following questions:
Are you a cheap or premium option?
Do your customers perceive great value in your product?
Are you below or above your competitors?
Is your brand strong enough to raise prices?
Knowing this, you can try selectively increasing your prices at first and see the results.
The secret is knowing how much your average customer is willing to pay - sometimes we undersell ourselves under the false impression that we will lose customers if we are more expensive. But the reality is that it is much easier to have a few customers who pay well, rather than many who are looking for the cheap.
The idea is to charge what you consider a competitive price and at the same time represent what your product is worth, and always do controlled tests to know if you are leaving money on the table.
#2: Adjust the quality of your product
If raising your prices isn't an option, you can also try changing the thailand code phone number quality or features of your product. This may mean making a cheaper product and cutting corners... but it may also mean making one that's more elaborate or has better features.
On the one hand, you can try to reduce production costs or limit the hours spent on producing a product or service. You can make a multitude of adjustments:
Use cheaper materials
Reduce the number of hours spent
Limit features
Delete functions
By doing this, you can save on variable costs and instantly reduce your break-even point. Of course, you must be sure that your sales remain stable, or at least that you get a positive result.
You can also go in the opposite direction: increase the quality of your product.
The other side of the coin is offering better features or a higher quality product at the same price, with the aim of attracting more sales and being more competitive. Here, the idea is to make use
For all start-up companies, the top priority should be to reach the breakeven point. This can only be achieved in two ways: either you increase your revenues, or you reduce your expenses.
Let's take a look at some techniques to get you closer to profitability:
#1: Raise prices
It's the main strategy to be able to reach the break-even point. And many times, it's as simple as it sounds-- if you want to earn more, sell more expensively.
The problem with raising prices is that it's a difficult task--your customers will never want to pay more for the same thing, and your competitors will take advantage of that.
In order to raise prices sensibly, it is very important to know the value your product brings and where you are positioned. Ask yourself the following questions:
Are you a cheap or premium option?
Do your customers perceive great value in your product?
Are you below or above your competitors?
Is your brand strong enough to raise prices?
Knowing this, you can try selectively increasing your prices at first and see the results.
The secret is knowing how much your average customer is willing to pay - sometimes we undersell ourselves under the false impression that we will lose customers if we are more expensive. But the reality is that it is much easier to have a few customers who pay well, rather than many who are looking for the cheap.
The idea is to charge what you consider a competitive price and at the same time represent what your product is worth, and always do controlled tests to know if you are leaving money on the table.
#2: Adjust the quality of your product
If raising your prices isn't an option, you can also try changing the thailand code phone number quality or features of your product. This may mean making a cheaper product and cutting corners... but it may also mean making one that's more elaborate or has better features.
On the one hand, you can try to reduce production costs or limit the hours spent on producing a product or service. You can make a multitude of adjustments:
Use cheaper materials
Reduce the number of hours spent
Limit features
Delete functions
By doing this, you can save on variable costs and instantly reduce your break-even point. Of course, you must be sure that your sales remain stable, or at least that you get a positive result.
You can also go in the opposite direction: increase the quality of your product.
The other side of the coin is offering better features or a higher quality product at the same price, with the aim of attracting more sales and being more competitive. Here, the idea is to make use