Break-Even Calculator
Find when your revenue equals your costs.
What is Break-Even Analysis?
The break-even point (BEP) is the number of units you need to sell to cover all your costs. At this point, you are not making a profit, but you are not losing money either. Net profit is zero.
Understanding Costs
- Fixed Costs: Expenses that don't change regardless of sales volume (e.g., Rent, Insurance, Salaries).
- Variable Costs: Expenses that rise with each unit sold (e.g., Raw Materials, Packaging, Shipping).
- Contribution Margin: The selling price minus variable costs. This is the amount from each sale that "contributes" to paying off fixed costs.
Why It Matters
Knowing your BEP helps you set sales targets. If your BEP is 500 units/month, and you only forecast selling 300, you need to either lower costs or raise prices to survive.