Profit Equation

Phil Thow understands that the profit equation is important to business success: Profit = Revenues - Costs where Revenues = (selling price * quantity of product) and Costs = (average variable costs * quantity) + total fixed costs.
Therefore, Profit = (selling price * quantity) - (average variable costs * quantity + total fixed costs).
Total fixed costs can solve for the quantity of product at the breakeven point.
When the profit is zero, the quantity of products at the break even equals the Total fixed costs / (selling price - average variable costs).
According to Phil Thow, business still has the alternative not to sell the products that will not be lucrative in the market, for instance those that do not correspond suitably into their sales mix. Businesses may also choose to sell products that lose money to serve a loss leader and to present an entirely new string of products. However, Phillip Thow believes that there is no sense in selling or continuing the marketing of a product that obviously will not improve its sales by exceeding the breakeven point.