Break Even Point. This KPI is used to determine when a business will be able to cover all expenses and start to make a profit. Specifically for dance studios, It will tell you how many students you need to cover costs. 

Formula: fixed costs divided by selling price per unit minus variable cost per unit.

Fixed Cost- rent, utilities, insurance. 

Selling Price Per Unit- How much is being paid per one hour class per student. 

Variable Cost Per Student- How much you pay your instructors, how much you’re spending to clean the room or for materials. 

For Example: 5,000 is your total Fixed Costs. Selling Price Per Unit is 50 dollars per 1 hour class per student. Variable cost is 20 dollars. 50-20 = 30 ➗ by 5,000. This would mean you need 167 students to cover costs. 167 is your break even number. 

Return On Investment. Return on Investment (ROI) measures the profitability of an investment. 

Formula: Net profit divided by the cost of the investment multiplied by 100. 

For Example: Let's say you invest 10,000 in a marketing campaign and generate 15,000 in revenue. That means your ROI is 50%. (10,000 ➗ 15,000 x 100 = 50%) 

This metric is important for budgeting and appropriately allocating funds to grow your studio. 

Let’s say you’re spending money on an open house, and word of mouth referrals are still generating the greatest amount of new enrollment. ROI would show you it would be worthwhile to consider moving that money over to something like referral perks. 

Before you get too deep into the weeds, choose a few KPIs that require minimal effort to track, and once you’ve remained consistent, start to follow KPis from other categories. 

This is absolutely NOT over your head! It's just a language you haven't learned to speak yet. But you can do this. Once you do, things will not only make sense, but you’ll understand your numbers and what they mean for the overall health of your business. 

Remember, step 1 of following KPis is having accurate books so you can run accurate reports! 

If you’re fully onboarded with dancebookkeeping.co by October 18th, we can guarantee your books will be done by January, and you can start tracking those KPIs.