Fix the comparison boundary before calculating
Records and assumptions to align
- Define one delivery cycle, learner outcome and paid-enrolment denominator. (not complete)
- Separate fixed cycle design/delivery cost from per-learner payment, material and support cost. (not complete)
- Calculate retained revenue after explicit refund/credit assumptions. (not complete)
- State the maximum learner count supported by teaching, feedback, community and service promises. (not complete)
- Round break-even upward and preserve a no-crossing result when unit contribution is non-positive. (not complete)
| Field | Required unit | Preferred evidence |
|---|---|---|
| retained revenue per learner | CU/paid learner | payment/refund cohort or explicit scenario |
| variable cost per learner | CU/paid learner | provider terms and delivery records |
| fixed cycle costs | CU/cohort cycle | time/cost record and current contracts |
Build a reproducible scenario
contribution per paid learner = retained revenue per learner - variable cost per learner; break-even learners = ceiling(fixed cycle costs ÷ contribution per paid learner)
- retained revenue per learner
- Price less refunds/credits allocated under the stated scenario (CU/paid learner) — payment/refund cohort or explicit scenario
- variable cost per learner
- Payment, materials, licences and support that change with learners (CU/paid learner) — provider terms and delivery records
- fixed cycle costs
- Preparation, fixed live delivery, launch and cycle costs that do not change in the tested band (CU/cohort cycle) — time/cost record and current contracts
Round up because a fraction of a learner cannot enrol. If contribution per learner is zero or negative, return no finite break-even rather than dividing.
Fictional cohort break-even calculation
Price, refund allowance and costs are invented neutral-currency inputs.
| Case | Declared inputs | Substitution | Result |
|---|---|---|---|
| Retained revenue | 300 CU price; 15 CU refund/credit allowance | 300 - 15 | 285 CU/learner |
| Learner contribution | 285 retained revenue; 45 variable cost | 285 - 45 | 240 CU/learner |
| Break-even | 2,900 fixed cycle cost; 240 contribution/learner | 2,900 ÷ 240 = 12.08; round up | 13 paid learners |
| Capacity headroom | 18 practical learner capacity; 13 break-even | 18 - 13 | 5 learners of headroom |
Stress-test the uncertain inputs
| Variable | Lower case | Higher case | What it tests |
|---|---|---|---|
| Refund/credit allowance | Lower completed-cohort case | Explicit downside case | Tests retained revenue |
| Support cost per learner | Designed boundary | Higher-touch case | Tests variable delivery burden |
| Practical capacity | Quality/service constrained | Evidence-backed capacity | Tests whether the break-even range is feasible |
Stop and review when
- Contribution per learner is zero or negative. (not complete)
- Break-even exceeds practical delivery capacity. (not complete)
- Enrolment is presented as forecast rather than a scenario. (not complete)
Turn the scenario into a controlled decision
- Reconcile the baseline to current records and name the evidence owner.
- Run the base case, then change one uncertain input at a time.
- Record the chosen response, approval limit, review date and stop trigger.
- Compare actual results with the original boundary before reusing the assumption.
Avoid these mistakes
- Rounding break-even down. (not complete)
- Omitting preparation/support labour or per-learner platform/payment cost. (not complete)
- Assuming unlimited cohort size after break-even. (not complete)
Questions to resolve before approval
- Does 13 learners guarantee a profitable cohort?
- No. It is the crossing under the stated retained-revenue, cost and capacity assumptions.
- What if break-even exceeds the class limit?
- The current price/cost/design case is not feasible. Change an explicit input or do not proceed; do not raise capacity without evidence.
Methodology and source boundary
- Break-even Sales methodology — Margin101: Product-owned contribution and whole-unit rounding boundary.
- Service Rate & Quote methodology — Margin101: Product-owned delivery and support labour boundary.
- Capacity-Constrained Profit Mix methodology — Margin101: Product-owned practical capacity check.