Business Planning and Breakeven Point (BEP) Calculation

  • Two major expenses involved in any business
    • Capital Expenses: Fixed costs, which include licensing fees, infrastructure cost, etc.
    • Operational Expenses: Variable costs, which include rentals, staff salary, bills, stationery, marketing, etc.
  • Sales, in the context of a center offering test-prep programs, are defined as:
    (no. of enrollments) X (fees collected per enrollment)
  • Breakeven Point (BEP) is reached when Sales = Fixed costs + Variable Costs. Any sale beyond the BEP contributes to net profit
  • To reach BEP quicker:
    • Minimalize your operational expenses
    • Have clarity on how many students to enroll and at what fees
    • Add new/additional programs to the existing one(s)