TECH LINK UP

In any home business you have two kinds of expenses—( 1) fxed expenses which are also called overhead expenses, and (2) variable expenses, also called volume or out-of-pocket (oop) expenses.
The beauty of any home business is its low fixed costs like rent, depreciation, manager’s salaries, etc. Why? Because the lower your fixed costs, the sooner iou break even. In any business you reach break even when your sales income equals your fixed plus variable costs. Let’s see how this works.
Suppose you have a home business in which you sell one product—a large cut-glass bowl. You sell this glass bowl at $10, after paying in variable costs (cost of bowl, shipping cost to customer, etc.) on each bowl. Your fixed costs (rent, depreciation, etc.) are $300 per year. What is your break-even point?
On each bowl you sell you have a contribution of $10 — $7 = $3. When you’ve sold just enough bowls so that the sum of the contributions from each sale equals your fixed expenses, you will break even. Or, fixed expenses / contribution per sale = break even. For this business, break even = $300/$3 = 100 bowls. Once you reach break even, the contribution per sale = profit per sale = $3 per sale in this business. And your profit percentage, after you reach break even = contribution $/ sales $ = $3! $10 = 0.30, or 30 per cent.
Now what is your potential home profit in this business? We know that you’ll earn a profit of $3 on each bowl you sell, after you reach break even. But how many bowls will you sell per year? If you sell 100 bowls your profit will be zero because you will just break even. Let’s say, however, that you think you can sell 500 bowls a year. What will your profit be? Find the difference between your expected sale and the break-even quantity and multiply this by the profit per sale, or (500 — 100) ($3) = $1,200. Thus, you’d have a profit of $1,200 per year, or $100 per month, from your ivime business.