In this example, increasing monthly fixed costs from 6,000 to 6,600 changes the result from 100 per sale to 110 per sale. All other inputs stay the same.
Try this with your own numbersFormula and worked example
Overhead allocation = fixed costs / completed sales
| Input | Example |
|---|---|
| Monthly fixed costs | 6,000 |
| Completed policy sales per month | 60 |
| Calculated result | 100 per sale |
Choose reliable inputs
Account for delivery time, review work and when you expect to be paid for each engagement. For this insurance agency calculation, use time sheets, engagement scopes and invoice ageing and a consistent definition of one policy sale.
- Lead costs: include the portion belonging to this policy sale or reporting period, and record where the value came from.
- Service time: include the portion belonging to this policy sale or reporting period, and record where the value came from.
- Renewal work: include the portion belonging to this policy sale or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
What happens when monthly volume falls?
Fixed cost per sale rises when completed volume falls. Test a conservative volume scenario before setting prices.
This simple equal allocation does not capture differences in job duration or resource use.
What if this input changes?
If monthly fixed costs rises by 10%, this example changes by 10 per sale. This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.