Marketing Analysis Toolkit: Breakeven Analysis

Posted: 6 Mar 2010

See all articles by Thomas J. Steenburgh

Thomas J. Steenburgh

University of Virginia - Darden Graduate School of Business

Jill Avery

Harvard Business School

Date Written: February 4, 2010

Abstract

Marketing managers are often called upon to make recommendations for or against programs that cost money to implement. Before expenditures are made, managers want to be sure that they will be getting a return on their investment. One way of assessing this is by calculating the breakeven point. In this note, we introduce the concept of breakeven analysis and show how it is used to guide marketing decision making. This analysis helps students assess the feasibility of proposed fixed and variable marketing expenditures, the feasibility of permanent pricing changes, and the feasibility of a new product introduction. The note gives students a foundation for analyzing marketing cases, as well as providing an analytical structure and process for completing a marketing plan. The note is accompanied by a free Excel worksheet which contains sample problems, pre-built Excel models to calculate breakeven, and charts and graphs which help visualize the results.

Suggested Citation

Steenburgh, Thomas J. and Avery, Jill J., Marketing Analysis Toolkit: Breakeven Analysis (February 4, 2010). HBS Case No. 510-080; Harvard Business School Marketing Unit. Available at SSRN: https://ssrn.com/abstract=1564846

Thomas J. Steenburgh (Contact Author)

University of Virginia - Darden Graduate School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Jill J. Avery

Harvard Business School ( email )

Cambridge, MA
United States
6174958084 (Phone)

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