Who asked: the CEO of Brisa Water Filters (made up for practice). She is weighing an 8% price rise. The head of sales warns that customers will leave; a test market lost about 10% of its volume.
The data: price, variable cost, annual volume, fixed costs, the proposed rise and the test market's volume loss, at the top of the Pricing sheet.
What done looks like: profit today and after the rise, the volume Brisa could lose before the rise stops paying, break-even and the margin of safety, profit across a range of volume losses, and a one-cell recommendation with its headroom.
A price rise trades margin for volume: every remaining customer pays more, and some customers leave. Whether it pays depends on contribution, price less variable cost, because the whole increase drops straight into it.
The key number is the volume you can lose before profit falls:
break-even loss = price gain per unit / new contribution per unit
With a price of 48, a variable cost of 30 and an 8% rise, the gain is 3.84 and the new contribution 21.84, so up to about 17.6% of volume can go. If customers leave at a lower rate than that, the rise adds profit.
This case walks through the decision in six steps, in one workbook: profit today, profit after, the break-even loss, break-even units and margin of safety, a sensitivity row, and the recommendation. Fixed costs don't change the answer to "does the rise pay?", but they do decide how much room the business has.