A new performance model of the IEEE 802.11 protocol is introduced that calculates throughput, average packet delay, packet drop probability and average packet drop time. This model is validated with simulation results using the OPNET^TM simulation package. The proposed model predicts 802.11 protocol performance very accurately since it considers both transmission errors and packet retry limits. The effect of errors and network size on the performance of the basic access scheme, in terms of throughput, packet delay, packet drop time and drop probability is explored.