Explanation
Knowing your break-even point helps:
- Set realistic sales targets
- Price products appropriately
- Manage risk
Formula:
Break-even Point (Units) = Fixed Costs / (Selling Price - Variable Cost per Unit)
Practical Example of Break-even Point
If a company’s fixed costs are £60,000 and each product generates £30 in profit, it must sell 2,000 units to break even.
How Bizcap Can Help:
Struggling to cover fixed costs during startup or expansion phases? Bizcap offers funding that gives you the time needed to achieve break-even and profitability.