Certified Government Financial Manager (CGFM) 2025 – 400 Free Practice Questions to Pass the Exam

Calculating a break-even fee requires a comprehensive understanding of both estimates of service volume and costs. The essence of determining a break-even point lies in identifying the level of service that can be provided at a cost that matches the revenue generated.

Service volume refers to the amount of service expected to be delivered, and it directly impacts revenue. The costs associated include both fixed costs, which do not change with the level of service, and variable costs, which fluctuate with service volume. By estimating both the anticipated volume of service delivery and the total costs involved—fixed and variable—an organization can determine the fee required to cover all costs, ensuring there is no profit or loss at that point.

While variable costs, fixed costs and market conditions, and overall program expenditure data play important roles in financial analysis, they alone do not encompass the necessary parameters for calculating a break-even fee. Only by integrating estimates of service volume with cost estimates can a reliable break-even analysis be accurately performed.