How far apart are your best year and your worst?
A better year is not one input nudged upward. It is more units at a slightly better price with a small buying gain and the extra salary that made it happen, all at once. That is what scenarios are for and what sweeping one input at a time can never show.
Words on this sheet
- Contribution: What is left of the income after the costs that come with it, before the fixed costs are paid.
Finance Starter Scenarios free
After you install, this is the model to open.
Base, Better, Worse: Save the Three Cases
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
The answer
The summary sheet puts all three cases in one table:
- Base operating profit
- $22,800 on $828,000 of revenue
- Better
- $122,750 on $1,021,250
- Worse
- -$84,080 on $651,200
- Base break-even
- 16,774 units, 93% of plan
The number worth stopping on is not the profit range, it is break-even. In the base case you are running with about 7% of headroom on volume, so a normal bad quarter puts the year under water, and the Worse case needs 20,260 units to break even against a plan of 18,000. Save a fourth case with the Worse volume and the Base price, and you find out how much of the loss was discounting rather than demand. What three cases cannot tell you is how likely any of them is: they are three points, not a range.
The model
A one-product year with four assumptions and five results. The Base, Better and Worse columns are already written on the sheet, so saving each case is a copy and a click.
| Units sold | 18,000 |
| Average price | $46 |
| Cost a unit | $27.40 |
| Fixed costs | $312,000 |
| Revenue, profit and break-even | calculated per case |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
Next question
- Which thirty invoices should you actually check?Pull a Fair Sample of Invoices to Check
- Which forecast should you actually quote?What Will Next Quarter's Fees Be?
- Is that client really slower or just one late invoice?Do These Two Clients Pay at the Same Speed?
- Is the plan limited by money or by people?Split a Fixed Budget Across Three Things
- How often does an ordinary year lose money?What If the Biggest Client Leaves?
- Did that payment land on the right client?Match the Invoices to the Client List
Every model like this one, and the method behind them: What-if analysis in Google Sheets.