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    EDP)

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    02 - CM Ankita Adam
    The document discusses calculating the break-even point for a digital marketing start-up business. It provides assumptions for fixed costs, variable costs, average revenue per client, and profit margin. Using these assumptions, it calculates that the break-even point is 5 clients per month - meaning the business needs to acquire at least 5 clients to break even financially. It notes that the break-even point is sensitive to changes in the assumptions.

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    EDP)

    Uploaded by

    02 - CM Ankita Adam
    62 views2 pages
    The document discusses calculating the break-even point for a digital marketing start-up business. It provides assumptions for fixed costs, variable costs, average revenue per client, and profit margin. Using these assumptions, it calculates that the break-even point is 5 clients per month - meaning the business needs to acquire at least 5 clients to break even financially. It notes that the break-even point is sensitive to changes in the assumptions.

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    The document discusses calculating the break-even point for a digital marketing start-up business. It provides assumptions for fixed costs, variable costs, average revenue per client, and profit margin. Using these assumptions, it calculates that the break-even point is 5 clients per month - meaning the business needs to acquire at least 5 clients to break even financially. It notes that the break-even point is sensitive to changes in the assumptions.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    62 views2 pages

    EDP)

    Uploaded by

    02 - CM Ankita Adam
    The document discusses calculating the break-even point for a digital marketing start-up business. It provides assumptions for fixed costs, variable costs, average revenue per client, and profit margin. Using these assumptions, it calculates that the break-even point is 5 clients per month - meaning the business needs to acquire at least 5 clients to break even financially. It notes that the break-even point is sensitive to changes in the assumptions.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Practical 19 :

    Find the breakeven point for the business idea chosen by


    you.

    Introduction:
    The break-even point is the point at which a business's total revenue
    equals its total costs, resulting in zero profit or loss. In this report, we
    will discuss how to calculate the break-even point for a digital
    marketing start-up business.
    Business Idea:
    Our digital marketing start-up business will offer a range of services,
    including social media marketing, email marketing, search engine
    optimization (SEO), pay-per-click advertising, and content marketing.
    We will target small and medium-sized businesses that need help with
    their online marketing efforts.

    Costs:
    The costs associated with our digital marketing start-up business can
    be divided into fixed costs and variable costs. Fixed costs include the
    cost of setting up the business, such as rent, utilities, and salaries for
    staff. Variable costs include the costs associated with delivering our
    services, such as advertising spend, website hosting fees, and
    software licenses.

    Assumptions:
    To calculate the break-even point, we need to make some
    assumptions about the business. For this report, we assume the
    following:

    Fixed costs per month: $10,000


    Variable costs per client: $500
    Average revenue per client: $2,500
    Profit margin per client: 30%
    Calculating the Break-Even Point:

    The break-even point can be calculated using the following formula:


    Break-even point = Fixed costs / (Average revenue per client -
    Variable costs per client)

    Using the assumptions above, the break-even point for our digital
    marketing start-up business can be calculated as follows:
    Break-even point = $10,000 / ($2,500 - $500)
    Break-even point = 5 clients

    Therefore, we need to acquire at least 5 clients per month to break


    even. If we acquire fewer than 5 clients, we will incur a loss, and if we
    acquire more than 5 clients, we will make a profit.

    Sensitivity Analysis:
    It is important to note that the break-even point is sensitive to changes
    in the assumptions. For example, if the average revenue per client
    decreases or the variable costs per client increase, the break-even
    point will increase, and we will need to acquire more clients to break
    even. Similarly, if the profit margin increases, the break-even point will
    decrease.
    Conclusion
    In conclusion, the break-even point is a crucial metric for any business,
    including a digital marketing start-up business. By calculating the
    break-even point, we can determine how many clients we need to
    acquire to break even and make a profit. It is important to regularly
    review the assumptions and recalculate the break-even point to
    ensure that the business is on track to achieve its financial goals.
    Total Marks Obtained Sign of Teacher
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