Break-even point, in other words, is the place where total expenditure and total income balance. Enterprises will have a lot of fixed management expenses, such as rent, wages, taxes, insurance, plus working capital such as materials, materials, research and development, labor costs, marketing (and others), and they will get the total expenditure. On the other hand, total income refers to the funds obtained by enterprises through selling goods or providing services. ?
BEP is just a point where sales revenue covers all expenses. If the sales volume is lower than this point, the enterprise will lose money. If the sales volume is higher than this point, the gross profit of the enterprise will start to increase. Excellent sales leaders will use the break-even analysis formula to determine the minimum amount of their sales team, and then set goals on this basis to help improve the sales growth rate. Break-even analysis can help enterprises make forward-looking business choices based on data. ?
When the enterprise calculates the break-even point in the sales process, it can know the lowest price of products and services. This also allows the sales team to set the sales price range for different customers. This includes planning customer relationship management skills, such as up-selling discounts and promotions, and discount rates. In this way, enterprises can improve the winning rate of sales without the risk of loss.