Understanding Break-Even Point

The break-even point is where business income covers business costs. After that point, the business starts making profit.

Know your fixed costs

Fixed costs include rent, salaries, licences and other costs that stay similar each month.

Know your variable costs

Variable costs include stock, packaging, delivery and costs that rise with sales.

Use break-even for targets

If you know your break-even point, you know the minimum sales needed to avoid losing money.

Review regularly

If rent, wages or supplier costs increase, your break-even point changes.

Good records make break-even analysis much easier.