# Break-Even Analysis Quality Checklist

## 1. Cost Classification (8 items)
- [ ] All costs identified and documented with sources
- [ ] Each cost categorized as Fixed, Variable, or Step-Fixed
- [ ] Variable costs calculated per unit (not as monthly totals)
- [ ] Payment processing fees included (2.9% + $0.30 or actual rate)
- [ ] Return/refund costs included with realistic return rate
- [ ] Shipping costs reflect actual carrier rates (not estimates)
- [ ] Step-fixed cost thresholds identified with trigger volumes
- [ ] No costs double-counted across categories

## 2. Contribution Margin (6 items)
- [ ] All variable costs included (not just COGS)
- [ ] Marketplace fees included if selling on platforms
- [ ] Contribution margin calculated per unit AND as ratio
- [ ] Margin validated against industry benchmarks
- [ ] Margin calculated for each sales channel separately
- [ ] Discounting impact factored in (average discount rate)

## 3. Break-Even Calculation (5 items)
- [ ] Formula correctly applied (Fixed ÷ CM per unit)
- [ ] Break-even calculated in both units and revenue
- [ ] Break-even with target profit also calculated
- [ ] Math double-checked (CM × BE units = Fixed costs)
- [ ] Result is reasonable (sanity check against industry norms)

## 4. Scenario Modeling (7 items)
- [ ] Minimum 3 scenarios modeled (pessimistic, base, optimistic)
- [ ] Each scenario uses internally consistent assumptions
- [ ] Probability weights assigned and sum to 100%
- [ ] Weighted expected break-even calculated
- [ ] Variable ranges grounded in data (not guesses)
- [ ] Pessimistic scenario is realistic-worst, not catastrophic
- [ ] Optimistic scenario is realistic-best, not fantasy

## 5. Sensitivity Analysis (6 items)
- [ ] Top 3-4 highest-impact variables tested
- [ ] Price sensitivity tested at ±10% minimum
- [ ] COGS sensitivity tested at ±15% minimum
- [ ] Volume sensitivity tested at ±25-50%
- [ ] Two-variable sensitivity matrix created
- [ ] Most sensitive variable identified and flagged

## 6. Timeline Projection (5 items)
- [ ] Monthly cash flow projected from launch to break-even
- [ ] Ramp-up curve realistic (not flat-line from Month 1)
- [ ] Seasonality factored into monthly projections
- [ ] Cash requirements (negative months) quantified
- [ ] Timeline presented for all three scenarios

## 7. Data Quality (6 items)
- [ ] COGS from actual supplier quotes (not internet estimates)
- [ ] Shipping rates from carrier rate cards or 3PL contracts
- [ ] Volume projections based on comparable data or market research
- [ ] Return rate from industry data or own historical data
- [ ] Fixed costs from actual invoices or signed contracts
- [ ] All assumptions documented with sources

## 8. Presentation & Communication (5 items)
- [ ] Executive summary fits on one page
- [ ] Go/no-go recommendation clearly stated with rationale
- [ ] Top 3 risks identified with mitigation strategies
- [ ] Visual charts included (tornado, scenario comparison, cash flow)
- [ ] Assumptions clearly listed so stakeholders can challenge them

## 9. Validation (4 items)
- [ ] Model cross-checked: CM × BE units = Fixed costs
- [ ] Results compared to industry benchmarks
- [ ] Independent reviewer verified calculations
- [ ] Model updated with actual data after Month 1 of operations