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BREAK-EVEN ELASTICITY

For low-margin SKUs, which is more likely to grow profit?

Break-evens differ by variable margin:

Decrease Price?

If drop price by 4%,

sales must increase more than 36% to grow profit.

Break-even elasticity of -9 (i.e., 36/-4)

B2B:  Highly unlikely

B2C:  Highly unlikely

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Change in Price
Break-even change in sales

Increase Price?

If raise price by 4%, sales must decline less than 21% to grow profit.

Break-even elasticity of -5.25 (i.e., -21/4)

B2B:  Very likely

B2C:  Very likely 

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