The break-even point in pricing is the point where costs and expenses are equal to revenue. A break-even analysis can be performed to help determine the lowest level at which to set a selling price in a region and still break even. Performing this analysis can help to avoid costly mistakes, such as pricing too low and thus losing a large amount of money The break-even calculation for price, given a projected number of units sold is break-even price variable costfixed expenses/ projected units Variable cost in NewShoes is the unit cost of the product. Fixed costs are the marketing expenses for a region along with the allocated product development expense. Applying the formula with a variable cost of $40, and fixed expenses of $3,500,000, the break-even price for 100,000 units would be break-even price $40+$3,500,000/100,000 $4035 $75 1. Using the fixed expenses and projected sales from the example, what would the break-even price be if unit cost is $35? 2. If the break-even price is $75, and your target return on sales is 20%, what is the selling price? -Use the following data for questions 3 & 4- units sold unit cost target return on sales advertising 3. Calculate the break-even price $1,800,000 5 salespeople @ $80,000 each 1,200,000 $700,000 100,000 consumer promotions $40 personal selling 10% | dealer promotions $1,500,000 product development 4. What would the selling price have to be to get the target return? 5. What other factors besides break-even should you consider before setting price