How the calculator works
- Contribution per piece: selling price − variable cost. This is what each piece contributes towards the fixed costs.
- Break-even: fixed costs ÷ contribution per piece, rounded up. Every piece after it makes a profit.
- For a target profit: (fixed costs + target profit) ÷ contribution per piece.
- Margin of safety: (current output − break-even) ÷ current output: how far output can fall before you start losing money.
Which costs are fixed and which are variable
- Fixed costs are paid every month whatever the output: rent, monthly salaries, machine instalments, the fixed part of the power bill.
- Variable costs grow with every piece: fabric, trims, piece-rate labour, packaging, outside printing or washing.
- Keep overheads out of the variable cost. If you take the cost per piece from the garment cost calculator, remove its overhead share first, or the overheads are counted twice and the break-even comes out higher than it is.
- A worker on a fixed monthly wage belongs in fixed costs; a worker paid by the piece belongs in the variable cost.
This is a month worked out from estimates. ProTrack ties every stage of a job to what it actually costs and to the contract it belongs to, and computes expected and actual profit and the break-even point as the work proceeds, so an overrun shows while it can still be acted on.
Questions
What is the difference between fixed and variable costs?
Fixed costs are paid every month even if you produce nothing, like rent and monthly salaries. Variable costs grow with every piece, like fabric and piece-rate labour.
Should I take an order below the full cost per piece?
If the price is above the variable cost and you have idle capacity, the order contributes to your fixed costs. But if that price becomes your normal price, your fixed costs are never covered.
Why is break-even rounded up?
Because a piece is not sold in part. If the answer is 2,499.5 pieces, you need 2,500 to cover your costs.
Do you store the figures I enter?
No. The calculation runs in your browser and the figures are not sent to us. To come back to them, use "Copy link to this calculation".
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