{"id":13619,"date":"2024-06-19T05:16:01","date_gmt":"2024-06-19T09:16:01","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=13619"},"modified":"2026-02-12T04:05:43","modified_gmt":"2026-02-12T09:05:43","slug":"the-break-even-point-analysis-and-formula","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/the-break-even-point-analysis-and-formula\/","title":{"rendered":"The break even point: analysis and formula"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tThe break even point: analysis and formula\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2024-06-19T05:16:01-04:00\">June 19, 2024<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"The break even point: analysis and formula\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/the-break-even-point-analysis-and-formula\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/asavinwattanajantra\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2026\/03\/Asavin-350x350.jpg\" class=\"entry-author__image\" alt=\"Asavin\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2026\/03\/Asavin-350x350.jpg 350w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2026\/03\/Asavin-768x768.jpg 768w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2026\/03\/Asavin-810x810.jpg 810w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2026\/03\/Asavin.jpg 1000w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Asavin Wattanajantra<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>In an economy buffeted by inflation, supply chain vulnerabilities, and a competitive talent market, grasping the break even point is not just an accounting exercise\u2014it&#8217;s a survival strategy.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-here-s-what-we-ll-cover\">Here&#8217;s what we&#8217;ll cover<\/h4>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-break-even-point-key-learnings\" data-level=\"2\">Break even point &#8211; key learnings<\/a><\/li><li><a href=\"#what-\" data-level=\"2\">What is the break even point? &nbsp;<\/a><ul><li><a href=\"#h-what-is-the-break-even-formula\" data-level=\"3\">What is the break even formula?<\/a><\/li><li><a href=\"#h-example-calculation\" data-level=\"3\">Example calculation<\/a><\/li><\/ul><\/li><li><a href=\"#is\" data-level=\"2\">What is a break even analysis? &nbsp;<\/a><ul><li><a href=\"#h-starting-a-business\" data-level=\"3\">Starting a business<\/a><\/li><li><a href=\"#h-mid-sized-business\" data-level=\"3\">Mid-sized business<\/a><\/li><li><a href=\"#h-modeling-business-changes\" data-level=\"3\">Modeling business changes<\/a><\/li><\/ul><\/li><li><a href=\"#h-what-is-the-purpose-of-a-break-even-analysis\" data-level=\"2\">What is the purpose of a break even analysis?<\/a><\/li><li><a href=\"#h-how-to-calculate-the-break-even-point-in-units-nbsp\" data-level=\"2\">How to calculate the break even point in units&nbsp;<\/a><\/li><li><a href=\"#h-break-even-analysis-example-how-to-calculate-the-break-even-point-in-dollars-nbsp\" data-level=\"2\">Break even analysis example: How to calculate the break even point in dollars&nbsp;<\/a><ul><li><a href=\"#h-step-1-identify-total-fixed-costs\" data-level=\"3\">Step 1: Identify total fixed costs<\/a><\/li><li><a href=\"#h-step-2-determine-the-contribution-margin\" data-level=\"3\">Step 2: Determine the contribution margin<\/a><\/li><li><a href=\"#h-step-3-calculate-the-contribution-margin-ratio\" data-level=\"3\">Step 3: Calculate the contribution margin ratio<\/a><\/li><li><a href=\"#h-step-4-calculate-the-break-even-point-in-dollars\" data-level=\"3\">Step 4: Calculate the break even point in dollars<\/a><\/li><li><a href=\"#h-example-summary\" data-level=\"3\">Example summary<\/a><\/li><\/ul><\/li><li><a href=\"#h-benefits-of-a-break-even-point-analysis\" data-level=\"2\">Benefits of a break even point analysis<\/a><\/li><li><a href=\"#h-final-thoughts\" data-level=\"2\">Final thoughts<\/a><\/li><\/ul><\/div>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Get your cash flow template<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Our easy-to-use template will help you understand the cash coming in and going out of your business so you can make smarter decisions.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-8fd32b11-050f-4828-89a5-aae504126966\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"800\" height=\"450\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/01\/GettyImages-561609507-1024x576-1-e1672917871162.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/01\/GettyImages-561609507-1024x576-1-e1672917871162.jpg 800w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-break-even-point-key-learnings\">Break even point &#8211; key learnings<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>By understanding and applying the break even formula, you can determine your business&#8217;s critical sales threshold to generate profit.&nbsp;<\/li>\n\n\n\n<li>The lower your fixed costs, the fewer units you need to sell to break even.&nbsp;<\/li>\n\n\n\n<li>Reaching the break even point sooner allows you to reduce reliance on external funding, saving on interest payments and other funding costs.&nbsp;<\/li>\n\n\n\n<li>Demonstrating a track record of profitability can make your business more attractive to potential investors or lenders for future growth plans.&nbsp;<\/li>\n\n\n\n<li><strong>Formula:<\/strong> Break even point (units) = fixed costs \/ (selling price per unit &#8211; variable cost per unit)<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-\"><strong>What is the break even point?<\/strong>&nbsp;<\/h2>\n\n\n\n<p>The break even point marks when your company&#8217;s revenues equal its costs, signaling the transition from loss to profit. <\/p>\n\n\n\n<p>It\u2019s a pivotal metric that can help you guide your business through financial uncertainty to commercial success.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-what-is-the-break-even-formula\">What is the break even formula?<\/h3>\n\n\n\n<p>The break even formula helps you understand how many units you need to sell to cover your costs. <\/p>\n\n\n\n<p>It calculates the point at which your total revenue equals your total costs. <\/p>\n\n\n\n<p>Here&#8217;s how you find it:&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-break-even-point-units-fixed-costs-selling-price-per-unit-variable-cost-per-unit\">Break even point (units) = fixed costs \/ (selling price per unit &#8211; variable cost per unit)<\/h4>\n\n\n\n<p>Use this <a href=\"https:\/\/www.sba.gov\/breakevenpointcalculator\/calculate\/\" target=\"_blank\" rel=\"noreferrer noopener\">online calculator from the US Small Business Administration for a quick calculation.<\/a>&nbsp;<\/p>\n\n\n\n<p>Once you sell beyond this point, your business starts to make a profit.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Here is a breakdown of the terms:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Fixed costs<\/strong>: these expenses do not change with the number of items sold, such as rent, salaries, insurance, and loan payments.&nbsp;<\/li>\n\n\n\n<li><strong>Selling price per unit<\/strong>: how much you sell each product unit for.&nbsp;<\/li>\n\n\n\n<li><strong>Variable cost per unit<\/strong>: these costs, like raw materials and labor, vary with the production volume.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>By plugging your specific numbers into this formula, you can determine the number of units needed to reach your break even point.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-example-calculation\">Example calculation<\/h3>\n\n\n\n<p>This calculation shows the point at which your revenue equals your costs, which is the break even point. <\/p>\n\n\n\n<p>Anything above this represents your profits and means your business is profitable.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Fixed costs:<\/strong> $50,000 (e.g., rent, salaries, insurance, loan payments)&nbsp;<\/li>\n\n\n\n<li><strong>Selling price per unit:<\/strong> $100&nbsp;<\/li>\n\n\n\n<li><strong>Variable cost per unit:<\/strong> $60 (e.g., raw materials, labor)<\/li>\n<\/ol>\n\n\n\n<p>Plug these numbers into the formula:&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-break-even-points-unit-fixed-costs-selling-price-per-unit-variable-cost-per-unit\">Break even points (unit) = fixed costs\/selling price per unit \u2013 variable cost per unit<\/h4>\n\n\n\n<p>Break even point (units) = 50,000 \/ 100-60&nbsp;<\/p>\n\n\n\n<p>= 50,000 \/ 40&nbsp;<\/p>\n\n\n\n<p>= 1,250 units&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"is\"><strong>What is a break even analysis?<\/strong>&nbsp;<\/h2>\n\n\n\n<p>Here are some examples of how a break even analysis can provide essential information about your company&#8217;s financial viability.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-starting-a-business\">Starting a business<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Financial projections<\/strong>: a break-even analysis is necessary for financial projections or expanding your product line.&nbsp;<\/li>\n\n\n\n<li><strong>Investment needs<\/strong>: it can also determine if you need further investment to reach profitability.&nbsp;<\/li>\n\n\n\n<li><strong>Estimating capital<\/strong>: provides a precise estimate of when your business will break even.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-mid-sized-business\">Mid-sized business<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Profitability projections<\/strong>: established businesses can benefit from break even analysis for new products or changes.&nbsp;<\/li>\n\n\n\n<li><strong>Cash flow management<\/strong>: helps manage cash flow, especially with fluctuating costs due to inflation.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-modeling-business-changes\">Modeling business changes<\/h3>\n\n\n\n<p><strong>Staff recruitment:<\/strong> use break-even analysis to model the impact of hiring new staff or opening new sites.&nbsp;<\/p>\n\n\n\n<p><strong>Pricing strategy: <\/strong>determine the best price for your products and <a href=\"https:\/\/www.sage.com\/en-us\/blog\/what-is-markup-percentage\/\">calculate markup<\/a> to ensure profitability.&nbsp;<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Get your cash flow template<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Our easy-to-use template will help you understand the cash coming in and going out of your business so you can make smarter decisions.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-8fd32b11-050f-4828-89a5-aae504126966\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"800\" height=\"450\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/01\/GettyImages-561609507-1024x576-1-e1672917871162.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/01\/GettyImages-561609507-1024x576-1-e1672917871162.jpg 800w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-purpose-of-a-break-even-analysis\">What is the purpose of a break even analysis?<\/h2>\n\n\n\n<p>This analysis can provide essential information about the financial viability of your company.<\/p>\n\n\n\n<p>This is particularly important when you\u2019re putting together financial projections or when you\u2019re expanding your product lines. <\/p>\n\n\n\n<p>It can tell you whether you\u2019ll need further investment to keep your business going until you reach the point at which you\u2019re making a profit.<\/p>\n\n\n\n<p>If you\u2019re starting a business, having a clear and accurate estimate of when you\u2019ll find that your business is breaking even will determine how much seed money or startup capital you\u2019ll need. <\/p>\n\n\n\n<p>Lender and investors will expect to see it as it gives them a good indication of when they might see their loans repaid or when they\u2019ll get a return on their investment.<\/p>\n\n\n\n<p>Even if your business has been going for a while an analysis when it will be profitable is still useful. <\/p>\n\n\n\n<p>It can help you to make projections and manage cash flow if you\u2019re launching a new product or making changes to an existing one. <\/p>\n\n\n\n<p>With inflation continuing to bite and many raw materials costs increasing it can be particularly informative.<\/p>\n\n\n\n<p>You might also use it to model the effect on recruiting new staff or opening a new site as it will show how many more sales you\u2019ll need to make to balance outgoings and income on any additional costs. <\/p>\n\n\n\n<p>Carrying out an analysis can help you to find the best price for your products or services in terms of your profitability.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-calculate-the-break-even-point-in-units-nbsp\">How to calculate the break even point in units&nbsp;<\/h2>\n\n\n\n<p>Calculating your break even point in units helps you determine the minimum sales volume needed to cover all your costs. <\/p>\n\n\n\n<p>Here are the steps:&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Identify all business costs:<\/strong> separate costs into fixed and variable categories.&nbsp;<\/li>\n\n\n\n<li><strong>Determine your selling price:<\/strong> decide on a price that meets profitability goals and is acceptable to customers.&nbsp;<\/li>\n\n\n\n<li><strong>Calculate the contribution margin:<\/strong> contribution margin = selling price per unit \u2212 variable cost per unit&nbsp;<\/li>\n\n\n\n<li><strong>Calculate the break even point in units:<\/strong> break-even point (units) = total fixed costs \/ contribution margin per unit&nbsp;<\/li>\n\n\n\n<li><strong>Review and adjust:<\/strong> regularly review and adjust costs, prices, and sales strategies.&nbsp;<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-break-even-analysis-example-how-to-calculate-the-break-even-point-in-dollars-nbsp\">Break even analysis example: How to calculate the break even point in dollars&nbsp;<\/h2>\n\n\n\n<p>Let&#8217;s use an example of calculating a break-even point in dollars.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-step-1-identify-total-fixed-costs\">Step 1: Identify total fixed costs<\/h3>\n\n\n\n<p>List all fixed costs associated with your business.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Rent: $3,000 per month&nbsp;<\/li>\n\n\n\n<li>Salaries: $10,000 per month&nbsp;<\/li>\n\n\n\n<li>Insurance: $500 per month&nbsp;<\/li>\n\n\n\n<li>Loan payments: $1,500 per month<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-total-fixed-costs-per-month-15-000\"><strong>Total fixed costs per month: $15,000<\/strong><\/h4>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-step-2-determine-the-contribution-margin\">Step 2: Determine the contribution margin<\/h3>\n\n\n\n<p>Calculate the contribution margin per unit:<\/p>\n\n\n\n<p><strong>Contribution\u202fmargin = selling\u202fprice\u202fper\u202funit \u2212 variable\u202fcost\u202fper\u202funit<\/strong><\/p>\n\n\n\n<p>For example, if the selling price per unit is $100 and the variable cost per unit is $60:<\/p>\n\n\n\n<p><strong>Contribution\u202fmargin = 100 \u2013 60 = 40<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-step-3-calculate-the-contribution-margin-ratio\">Step 3: Calculate the contribution margin ratio<\/h3>\n\n\n\n<p>Divide the contribution margin per unit by the selling price per unit to get the contribution margin ratio:<\/p>\n\n\n\n<p><strong>Contribution\u202fmargin\u202fratio = contribution\u202fmargin\u202fper\u202funit \/ selling\u202fprice\u202fper\u202funit<\/strong><\/p>\n\n\n\n<p>Using the example values:&nbsp;<\/p>\n\n\n\n<p><strong>Contribution\u202fmargin\u202fratio = 40 \/ 100 = 0.40<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-step-4-calculate-the-break-even-point-in-dollars\">Step 4: Calculate the break even point in dollars<\/h3>\n\n\n\n<p>Use the following formula to calculate the break even point in dollars:<\/p>\n\n\n\n<p><strong>Break even\u202fpoint\u202f(in\u202fdollars) = total\u202ffixed\u202fcosts \/ contribution\u202fmargin\u202fratio<\/strong><\/p>\n\n\n\n<p>Using the total fixed costs and contribution margin ratio from the example:&nbsp;<\/p>\n\n\n\n<p><strong>Break even\u202fpoint\u202f(in\u202fdollars) = 15,0000 \/ 0.40 = 37,500<\/strong><\/p>\n\n\n\n<p>This means you need $37,500 in sales to break even.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-example-summary\">Example summary<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Total fixed costs:<\/strong> $15,000&nbsp;<\/li>\n\n\n\n<li><strong>Selling price per unit:<\/strong> $100&nbsp;<\/li>\n\n\n\n<li><strong>Variable cost per unit:<\/strong> $60&nbsp;<\/li>\n\n\n\n<li><strong>Contribution margin per unit:<\/strong> $40&nbsp;<\/li>\n\n\n\n<li><strong>Contribution margin ratio:<\/strong> 0.40&nbsp;<\/li>\n\n\n\n<li><strong>Break even point (in dollars):<\/strong> $37,500<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-benefits-of-a-break-even-point-analysis\">Benefits of a break even point analysis<\/h2>\n\n\n\n<p>A break even point analysis will help your business in many ways, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Locate missing expenses<\/li>\n\n\n\n<li>Make business decisions based on facts rather than emotion<\/li>\n\n\n\n<li>Help set realistic goals<\/li>\n\n\n\n<li>Secure funding from investors<\/li>\n\n\n\n<li>Understand how to set the right price your products<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-final-thoughts\">Final thoughts<\/h2>\n\n\n\n<p>No one likes to think about money flowing out of their business, but being honest and realistic about it is necessary.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Similarly, it\u2019s essential to be practical when pricing; what can you charge your customers? <\/p>\n\n\n\n<p>What will they be willing to pay?&nbsp;<\/p>\n\n\n\n<p>Once you\u2019ve made these calculations, you can conduct your analysis. <\/p>\n\n\n\n<p>Doing these sums regularly is good, especially if your business is just starting.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Your company&#8217;s performance and plans will develop over weeks and months, while external factors can change suddenly and unexpectedly.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Knowing when and how your business will break even and become profitable will help you run a successful enterprise.&nbsp;<\/p>\n\n\n\n<p><em>Editor&#8217;s note: This article was originally published in January 2023 and has been updated for relevance<\/em><\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Break-even point = Fixed costs \/ Contribution margin, i.e. the minimum turnover that must be achieved to not lose money. Find out when your business will be profitable. <\/p>\n","protected":false},"author":356,"featured_media":13620,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[43],"tags":[299],"business_type":[40],"lilypad":[],"context":[],"industry":[],"persona":[],"imagine_tag":[],"coauthors":[586],"class_list":["post-13619","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-cash-flow","business_type-small-business"],"sage_meta":{"region":"en-us","author_name":"Asavin Wattanajantra","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/12\/BrandShootSA_Apr2022_Small-Retail_2136-JPG-Sage-Advice.jpeg","imagine_tags":[]},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/13619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/356"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=13619"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/13619\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/13620"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=13619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=13619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=13619"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=13619"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=13619"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=13619"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=13619"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=13619"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=13619"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=13619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}