FIGURE #2: BREAK EVEN ANALYSIS (Number of Students approach) As in Figure #1, your target revenue is $2600.00 per month. This allows you to cover your expenses of $600.00 per month, while providing your target monthly salary of $2000.00. Assumptions:
1. Assume you can maintain an average full time enrollment of 200 students per month.
$2600.00/200 = $13.00 per student each month This is what you would have to charge each student if you were to meet your revenue expectations.
2. However, after checking into the local market, you are confident that you could comfortably charge $20.00 per month. Let's see what happens to the revenue picture.
200 students x $20.00 = $4000.00 per month
Surplus $1400.00
Are you beginning to see how the relationship between pricing, and the number of students can work an your behalf? 3. O.K., after thorough research into the local market, you've determined that schools offering
what you intend to offer are charging students $30.00. How will that impact your revenue stream?
200 students x $30.00 = $6000.00 per month less target revenue...... -2600.00
Surplus $3400.00
Now you're really in business, Kiddo! |
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