Blog Welcome Message Example

The sales target: the Break Even Analysis

Today I sbizzarisco ...
Another issue dear to the translators is: what should charge a translator?
complex question requiring a simple answer. The Break Even Analysis can be helpful in this case. Since the early 1900s, scholars have tried to find a relationship between the sale price , cost of and volume of activity .
Although more than a century, this approach is still widely used. Need to clarify some key concept:
1) variable cost per unit (CVU) = costs that vary depending on the volume of activity. For example, a folder => variable cost of production € 0.01; 2 folders => variable cost € 0.02.
2) fixed costs (CF) = costs that do not vary, whatever the degree of capacity utilization.
3) revenue per unit (RU) = 1 page => € 20, 2 folders => € 40. Therefore, the revenue per unit is € 20.
4) contribution margin (CM) = represents the residual from the proceeds after covering the variable cost, ie, RU-CVU. In essence, it indicates the ability of the work by the translator to help cover its fixed costs.
If you want to know how many folders should translate into a year to cover the fixed costs, There is a beautiful formuletta: CF / CM
Suppose that a translator has the following variable cost per page translated (I have tried to identify some components of variable cost, even if 90% of the cost of a translator are fixed):
-electricity = € 2
-RINSE. € 4 = hardware
The same translator bill 20 to € folder has the following fixed costs per year:
software-license = € 1,000
-professional courses = € 500-
fees = € 500 = € 300
-depreciation (eye to amortization, whenever we want to consider them at a profit)
-
other costs = € 200 - Total = € 2,500
At this point, the contrast of our translator will be equal to RU-CVU = € 20 - € 6 = € 14.
How many folders should I translate to cover all fixed costs?
Break Even Point = CF / CM, in our example, € 2,500 / € 14 = 179 folders that correspond to a break-even sales of € 3,580 (€ 20 x 179). To find out how many folders
translate to achieve a profit goal, simply add to the amount of CF the desired profit.
remains the difficulty of identifying and measuring the variable costs, but I promise I'll be back on the subject.
Hello everyone!