Methodology
Location Break-even Planner methodology
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
1. Formulas and units
contributionPerUnitExTax = unit price − unit variable costWhere
- unitPriceExTax
- Unit price (currency units/product unit, ex tax)Source: Business record
- unitVariableCostExTax
- Unit variable cost (currency units/planning period, ex tax)Source: Business record
- contributionPerUnitExTax
- Contribution Per Unit Ex Tax (currency units, ex tax)Source: Calculated output
- unitContributionExTax
- Contribution per transaction (currency units, ex tax)Source: Calculated output
locationCostBaseExTax = location fixed costs + shared cost allocationWhere
- locationFixedCostsExTax
- Location fixed costs (currency units/planning period, ex tax)Source: Business record
- sharedFixedCostAllocationExTax
- Shared cost allocation (currency units/planning period, ex tax)Source: User assumption
- locationCostBaseExTax
- Location Cost Base Ex Tax (currency units, ex tax)Source: Calculated output
breakEvenUnits = ceil(location cost base / contribution per unit)Where
- contributionPerUnitExTax
- Contribution Per Unit Ex Tax (currency units, ex tax)Source: Calculated output
- locationCostBaseExTax
- Location Cost Base Ex Tax (currency units, ex tax)Source: Calculated output
- breakEvenUnits
- Break Even Units (whole units/planning period)Source: Calculated output
- unitContributionExTax
- Contribution per transaction (currency units, ex tax)Source: Calculated output
breakEvenRevenueExTax = break-even units × unit priceWhere
- unitPriceExTax
- Unit price (currency units/product unit, ex tax)Source: Business record
- breakEvenUnits
- Break Even Units (whole units/planning period)Source: Calculated output
- breakEvenRevenueExTax
- Break Even Revenue Ex Tax (currency units, ex tax)Source: Calculated output
unitContributionExTax = averageTransactionRevenueExTax − variableCostPerTransactionExTaxWhere
- unitVariableCostExTax
- Unit variable cost (currency units/planning period, ex tax)Source: Business record
- contributionPerUnitExTax
- Contribution Per Unit Ex Tax (currency units, ex tax)Source: Calculated output
- averageTransactionRevenueExTax
- Average transaction revenue (currency units, ex tax)Source: Business record
- variableCostPerTransactionExTax
- Variable cost per transaction (currency units, ex tax)Source: Business record
- unitContributionExTax
- Contribution per transaction (currency units, ex tax)Source: Calculated output
exactBreakEvenTransactions = incrementalFixedSpaceCostExTax / unitContributionExTaxWhere
- contributionPerUnitExTax
- Contribution Per Unit Ex Tax (currency units, ex tax)Source: Calculated output
- breakEvenUnits
- Break Even Units (whole units/planning period)Source: Calculated output
- incrementalFixedSpaceCostExTax
- Incremental fixed space cost (currency units, ex tax)Source: Business record
- unitContributionExTax
- Contribution per transaction (currency units, ex tax)Source: Calculated output
- exactBreakEvenTransactions
- Exact break-even transactions (transactions per planning period)Source: Calculated output
wholeBreakEvenTransactions = ceil(exactBreakEvenTransactions)Where
- breakEvenUnits
- Break Even Units (whole units/planning period)Source: Calculated output
- exactBreakEvenTransactions
- Exact break-even transactions (transactions per planning period)Source: Calculated output
- wholeBreakEvenTransactions
- Whole break-even transactions (whole transactions per planning period)Source: Calculated output
breakEvenSalesExTax = exactBreakEvenTransactions × averageTransactionRevenueExTaxWhere
- breakEvenUnits
- Break Even Units (whole units/planning period)Source: Calculated output
- breakEvenRevenueExTax
- Break Even Revenue Ex Tax (currency units, ex tax)Source: Calculated output
- averageTransactionRevenueExTax
- Average transaction revenue (currency units, ex tax)Source: Business record
- exactBreakEvenTransactions
- Exact break-even transactions (transactions per planning period)Source: Calculated output
- breakEvenSalesExTax
- Break-even sales (currency units, ex tax)Source: Calculated output
capacityUseRate = exactBreakEvenTransactions / transactionCapacityWhere
- breakEvenUnits
- Break Even Units (whole units/planning period)Source: Calculated output
- transactionCapacity
- Transaction capacity (transactions per planning period)Source: Business record
- exactBreakEvenTransactions
- Exact break-even transactions (transactions per planning period)Source: Calculated output
- capacityUseRate
- Capacity needed at break-even (decimal rate)Source: Calculated output
breakEvenFeasible = capacityUseRate ≤ 1 and wholeBreakEvenTransactions ≤ transactionCapacityWhere
- breakEvenUnits
- Break Even Units (whole units/planning period)Source: Calculated output
- transactionCapacity
- Transaction capacity (transactions per planning period)Source: Business record
- wholeBreakEvenTransactions
- Whole break-even transactions (whole transactions per planning period)Source: Calculated output
- capacityUseRate
- Capacity needed at break-even (decimal rate)Source: Calculated output
- breakEvenFeasible
- Break-even feasibility (boolean status)Source: Calculated output
Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.
2. Worked example
Input assumptions
The worked rows below come directly from the registered engine and visible default fixture.
Calculation and outputs
Example
The worked rows below come directly from the registered engine and visible default fixture.
- Contribution Per Unit Ex Tax
- 35 currency units
- Location Cost Base Ex Tax
- 100,000 currency units
- Break Even Units
- 2,858 units
- Break Even Revenue Ex Tax
- 228,640 currency units
- Contribution per transaction
- 30 currency units
- Exact break-even transactions
- 1,000
- Whole break-even transactions
- 1,000
- Break-even sales
- 50,000 currency units
- Capacity needed at break-even
- 50%
- Break-even feasibility
- Within transaction capacity
The exact engine-derived outputs are shown in the labelled rows below.
Interpretation
Location break-even units shows the whole-unit volume needed to cover avoidable location cost and the declared shared-cost allocation.
Scenario study: threshold, sensitivity and feasibility
Make the location cost basis and capacity gap explicit
Calculate the threshold on one declared avoidable-cost and shared-allocation basis, then test demand, cash and cannibalisation separately.
Input basis
- Price: 70 CU per unit; variable cost: 40 CU per unit.
- Avoidable location fixed cost: 9,000 CU per month.
- Declared shared allocation: 1,800 CU per month; capacity: 320 units per month.
| Row | Intermediate calculation | Result |
|---|---|---|
| Contribution per unit | 70 − 40 | 30 CU per unit |
| Declared cost basis | 9,000 + 1,800 | 10,800 CU per month |
| Break-even threshold | 10,800 ÷ 30 | 360 units per month |
| Capacity gap | 320 − 360 | −40 units per month |
Interpretation
The threshold exceeds entered capacity by 40 units per month, so this cost basis is infeasible without changing price, cost or capacity.
Boundaries and next step
- An incremental-only view that excludes allocation is a different decision basis and must be labelled.
- No demand, lease, property, wage, tax or cannibalisation benchmark is supplied.
Continue with Location Break-even Planner, Location Expansion Planner or expansion decision scorecard.
3. Validation and boundary checks
- All inputs must be finite and within the visible boundaries.
- Costs, revenue and contribution use one consistent ex-tax basis and planning period.
- Whole-unit thresholds round upward only where the named engine formula requires it.
4. Assumptions and source classification
- All prices, costs, demand limits and capacity values are user-supplied records or explicit scenarios.
- Allocated costs remain visible and separate from avoidable costs.
- The global workflow infers no market benchmark, policy threshold or future demand.
This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.
5. Limitations
- The model does not forecast demand, implementation timing, service quality or strategic fit.
- It does not replace accounting, tax, legal or financial advice.
This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.
6. Update and evidence policy
Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.
Change history
- : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.
Related reading
Guides to interpret the decision and its assumptions.
- Break-Even Analysis: Threshold, Not Forecast
Turn unit contribution and fixed costs into a sales threshold, then test whether the required volume and capacity are plausible.
Read guide