BREAK EVEN ANALYSIS
You make and sell premier blackberry jam. Your competitor sells a similar product for $8 for an 8 oz. jar.
You decide to price your jam at $10.
How many jars of jam do you need to sell to reach your BREAK EVEN?
Variable Expenses (per jar):
Organic Berries
$3
Sugar
$1
Pectin
.50
Jars/lids
$1
Labor
$1.25 ($10 an hour)
Total Variable Expenses
$6.75
Total Fixed Expenses
$320
Fixed Expenses:
Product Liability Insurance
$20 ($240 year)
Phone/Internet
$100
Delivery/Transportation
$100
Rent
$100
Selling price
$10
Variable expenses
Contribution margin
-
$6.75
$3.25
Contribution margin is how much each jar of jam you sell
“contributes” toward fixed expenses and PROFIT!
Fixed expenses
$320
Divided by contribution margin
$3.25
Break even
98 jars of jam ($980)
J.B. King, King Family Farm, 740-698-3940 and Jackie LeBerth, Bramble Creek Farms, [email protected]