Determine when your business becomes profitable with our free Break-Even Calculator. This essential financial tool helps entrepreneurs and business owners calculate the exact point when total revenue equals total costs, indicating when your business starts making a profit.
Understand exactly how many units you need to sell to cover all costs and start making a profit.
Evaluate how different pricing strategies affect your profitability and break-even point.
Identify opportunities to reduce costs and lower your break-even threshold.
Break-even analysis is a fundamental financial calculation that determines when your business's total revenue equals its total costs. Here's how the calculation works:
Break-Even Point (Units) = Fixed Costs รท (Selling Price per Unit - Variable Cost per Unit)
This formula tells you how many units you need to sell to cover all your costs. Once you surpass this number, each additional unit sold contributes directly to your profit.
Fixed costs remain constant regardless of production volume (rent, salaries, insurance). Variable costs change with production volume (raw materials, packaging, shipping). Understanding both is crucial for accurate break-even analysis.
You should recalculate your break-even point whenever your costs or pricing changes significantly. Many businesses review this quarterly or when considering major changes to their operations or pricing structure.
You can lower your break-even point by: (1) Reducing fixed costs, (2) Decreasing variable costs per unit, or (3) Increasing your selling price. Our calculator helps you model different scenarios to find the optimal balance.
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