balance BUSINESS TOOLS

Break-Even Analysis

Know your numbers. Determine when you start making profit.

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How It Works: Calculates the number of units you must sell to cover entirely your fixed and variable costs.

Key Inputs:
  • Fixed Costs: Expenses that don't change (Rent, Salaries).
  • Price per Unit: Selling price of one item.
  • Variable Cost: Cost to produce one item (Materials, Labor).


Formula: Break-Even Units = Fixed Costs ÷ (Price per Unit - Variable Cost per Unit).
Break-Even Units
167
Units to sell to cover costs
Break-Even Sales ($)
$8,334

Obtiene $30 de beneficio por cada unidad vendida (Margen de Contribución).

What is Break-Even Analysis?

The Break-Even Point (BEP) is the magic number where your total revenue equals your total costs (fixed + variable). At this point, there is no profit and no loss.

Why It Matters

Knowing your BEP is crucial for pricing your products and setting sales goals. It answers the question: "How many units do I need to sell just to cover my rent and materials?"

Fixed vs. Variable Costs

Fixed Costs
  • Rent / Lease
  • Salaries
  • Insurance
  • Software Subscriptions
Variable Costs
  • Raw Materials
  • Shipping per unit
  • Commission
  • Credit Card Fees

Contribution Margin

The difference between the Price per Unit and the Variable Cost per Unit is called the Contribution Margin. This is the amount of money each sale contributes towards paying off your fixed costs.