Break-even Analysis for Small Business: Calculate your Break-even Point
- Federation of Small Businesses
- 8 hours ago
- 6 min read
Break-even analysis helps you calculate how many units you need to sell to cover fixed and variable costs. Learn how it works and how to use it in your business planning.
Every business, from start-up to established enterprise, needs to answer one essential question: when will we actually start making money? That’s where break-even analysis comes in.
What is a break-even analysis?
A break-even analysis is a financial planning tool that identifies the exact moment your total revenue matches your total costs. At this specific milestone (the “break-even point”), your business is making neither a profit nor a loss; you have simply "broken even."
To find this tipping point, a break-even analysis looks at the relationship between your selling price and the two main types of business expenses:
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