Knowing your breakeven point helps you to set better-informed sales targets.
The breakeven point is the income needed to cover all costs. Earnings above the breakeven point generate profits.
Fixed costs and variable costs
Fixed costs such as rates remain the same regardless of how many sales you make. Variable costs such as production wages vary according to the number of goods or services produced.
How to Calculate Break-even
There are algebraic formulae for calculating the break-even point, but these can be daunting. The good news is that you do not have to do the calculations yourself, because there are plenty of free calculators available. All you need to know is -
You can enter these into a calculator and immediately generate a table which will display the break-even point and the estimated losses/profits for each level of units sold.
Break-even analysis can help with your pricing
Knowing your break-even point can help you set realistic prices. By entering a range of prices into the calculator you can estimate the level of sales necessary to make a profit and assess whether that level is realistic.
Break-even analysis can be especially helpful for startups
Established businesses usually know from experience how many units have to be sold to break even. Sometimes the experience comes at a cost. By undertaking a break-even analysis, startups can gain insight into the level of sales needed to be viable before they commit. Funds to the venture.
Talk to us about calculating your breakeven point
Business can be messy. You might have large numbers of different units for sale and these might, of necessity, have differing markups. Again, some costs might be partly fixed and partly variable. For reasons like this, break-even analysis might not be as simple as it sounds or might not even be the preferred option for your dashboard. It is not the end of the world. We might be able to design a bespoke dashboard for you so you keep your finger on the pulse each month.
Office Location
68 Ash Street, Barcaldine QLD 4725
Postal Address
PO Box 104, Barcaldine, QLD, 4725
Phone: 07 4651 1341
Email: admin@walshaccounting.com.au
ABN:
59 330 650 357
Clubs and Associations
Grant Applications