To establish the price of one or all the services we take into consideration the well-established technique of break-even point (BEP) or break-even point. This method is used to evaluate the relationship between variable and fixed income and costs.

Given a certain number of services provided, we can determine at what price level we reach fixed and variable costs coverage. Likewise, on the other hand, a price (for example that of the competition), we can determine which quantity of services will have to be paid and sold at certain cost levels.

The breakeven point (BEP) is represented by that total revenue volume that equals total costs.

If we want to know the break-even point relative to the quantity of services that must be sold, at a certain price level, to cover all costs (fixed and variable) it is possible to use the following formula:

BEP = Fixed Costs / Unit Price - Variable Cost (unitary)

We hypothesize that the Sport Ideal programs a cost of gymnastics for the elderly, with a unit price per lesson of €. 10 (if we take the other forms of price policy that we have analyzed, it is clear that formula is always the same), a variable unit cost of €. 4 and fixed costs for a whole year of €. 2,500. From these data we obtain:

2.500 / 10 - 4 = 416

The break-even point is represented by 416 lesson units that will have to be sold in a year, at that price to cover the total costs, below we would be in the sphere of losses, above in the sphere of profits.

If we divide the 416 units by a hypothetical number of users, suppose 15, we obtain the 28 lessons that represent the minimum number to be seen. Each subsequent lesson is profit, to each customer in a year.

From this it is possible to derive different stratewgies of the price to be offered to consumers

If the 28 lessons multiply them by €. 10 we get €. 280 is the minimum annual fee, from where a percentage of revenue to be applied can be applied, to identify an annual price that gives the sport center a profit and the customer a reason for expediency.

Another application of the break-even point is that of turnover, to calculate independently the units supplied and sold the turnover necessary to cover the total costs (fixed and variable) we use the following formula:

F = fixed costs / % contribution margin

The contribution margin indicates the percentage of disposable income to cover fixed costs and achieve a profit after deducting the variable costs.

Si ricava in questo modo:

% MC = 10 (hypothetical unit price) - 4 (unit variable cost) / 10 (unit price)

The percentage of the contribution margin is 60%

Turnover = 2.500 / 60 * 100 = 4.166.67

The amount of turnover needed to reach total cost coverage