Break-Even Analysis
Will this investment pay for itself? You're adding a $200/month tool or a $3k/month hire. Break-even analysis calculates the point at which revenue or value from the investment equals its cost. It's the simplest way to decide whether an automation, hire, or new offer will pay off financially.
Same question, different investments. A tool costs $200/month and saves 4 hours of manual work. Your hour is worth $150. Break-even = 1.3 hours saved per month. If you're saving at least that, the tool pays for itself. A part-time VA costs $2,500/month. They need to free or generate $2,500 of value (your time back, or revenue they enable). If they free 20 hours and your hour is worth $125, you're ahead. Break-even tells you the minimum return you need to make the investment worth it.
How much do I need to get back (in time or revenue) for this to pay for itself?
How to use it
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State the cost. Monthly or total. Include everything: subscription, your time to set up, ongoing management. For a hire, use all-in cost including labor burden.
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State the unit of return. Usually either hours freed (your time × value per hour) or revenue generated. E.g. "This tool saves 2 hours per proposal. I do 4 proposals/month. Value = 8h × $200 = $1,600/month." Or: "This hire frees 15h/week. Value = 60h × $250 = $15,000/month."
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Compare. If return ≥ cost, you've broken even. If not, you need to use the investment more (or get more from it) or the investment isn't right yet.
What breaks
Underestimating cost. "The hire is $4k" but you forget taxes, benefits, your time to manage. Use full cost so break-even is real.
Vague return. "It'll help with sales" doesn't give you a number. "It'll shorten the cycle by 2 weeks so we close 1 more deal per quarter" does. Be specific enough to check later.