What is Breakeven Analysis?

A breakeven analysis determines the point at which your revenue exactly equals your costs — you are neither making a profit nor a loss. For children's activity businesses, this is typically expressed as the number of enrolled children per class needed to cover costs, or the total number of enrolments across your business needed to cover all overheads.

The breakeven formula is: Fixed Costs divided by (Revenue per Child minus Variable Cost per Child). For example, if your fixed costs for a swimming class are one hundred pounds per session (venue hire, insurance allocation, admin), and each child pays ten pounds per session with one pound in variable costs (certificates, small equipment), your breakeven is approximately twelve children per class. Every child above twelve contributes directly to profit.

Understanding your breakeven point for each class, each venue, and your business as a whole is essential for pricing decisions, expansion planning, and financial management. Classes that consistently operate below breakeven need to be either grown (more marketing), repriced (higher fees), restructured (combined with another class), or closed. When considering opening a new class or venue, a breakeven analysis tells you how quickly you need to fill it to avoid losing money.