The break even point for a product or business is the point where sales revenue equals your fixed plus total variable costs. If you are below the break-even point, you are losing money. If you are above the break-even point, you are generating a profit. To break even, your sales revenue from each sale needs to exceed the variable costs of creating or delivering the product or service. The resulting gross margin can then be used to cover the fixed costs of your business. Once your fixed costs are covered, your business is at the break even point.
Sales Volume Required to Break Even
Break Even Analysis
Sales Revenue
$ 60,000
Total Costs
$ 56,250
Break Even Units
600
Operating Profit
$ 3,750
Based on your costs and price per unit, you will break even at a volume of 600 units.
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