How to use the profit sensitivity analyzer
Unit sales, unit price, variable cost per unit and fixed costs are each moved up and down by the same percentage, and the table shows how far operating profit shifts in response. It is the quickest way to decide which lever is worth pulling first.
Only one variable moves at a time; the other three stay at their base values. The price row, for example, assumes price rises while volume holds steady. In reality a price increase usually costs some volume, so read the price sensitivity as an upper bound on what a price move can do rather than a forecast.
The sensitivity figure is the profit change at the chosen upward step divided by that step. A value of 3.0 means operating profit moves roughly 3% for every 1% move in that variable, and a negative value means profit falls when the variable rises. Price usually carries the largest coefficient, with variable cost next, though businesses carrying heavy fixed costs often see unit sales lead instead. When base operating profit is negative, the percentages are calculated against its absolute value, and a note under the table says so.
Frequently asked questions
This page supports single-variable analysis only. To model price and volume moving together, edit the base inputs themselves so they reflect the new combination and run the calculation again.
It has the biggest effect, but difficulty matters just as much. Raising price scores high and costs you customers; trimming fixed costs scores lower yet is often something you can do this month. Weigh the coefficient against how realistic the move is.