![]() However, if you’re conducting your own BEP analysis or using a monthly calculator, be sure to divide any quarterly or yearly fixed costs by the period for which you’re calculating.Ĭosts that change over a period of time depending on the volume of sales.Ĭontribution margin is the difference between the price of a product or service and the cost to make that product or perform the service. Our calculator lets you calculate your break-even point on a monthly, quarterly, or yearly basis. These are usually recurring weekly, monthly, quarterly, or yearly costs. Fixed CostsĬosts that do not change over a period of time despite an increase or decrease in sales. Be sure to enter the sales price for the product or service you’re calculating your BEP for or using an average sales price for your products and services. How much in sales dollars you will charge your customers for the product or service sold. ![]() This is usually recommended if the cost of your products or services varies significantly or the services you provide vary by season. UnitĪlthough you can estimate your break-even point by adding up the monthly, quarterly, or yearly totals of fixed costs, variable costs, and sales prices, you can also calculate the BEP for each product or service sold. But before we go over those formulas, here’s a breakdown of the different components you’ll need to know before you start your analysis. There are two common ways to calculate your break-even point-in units or sales dollars. If your revenue is higher than your costs, you’re making a profit. If your revenue is under your costs, you’re operating at a loss. When this happens, your business is neither losing nor gaining money. The break-even point is the point in which your company’s costs equal its revenue. You can also use it to estimate your profit based on current or projected sales. If you’re ready to calculate your BEP, check out the calculator below! Use it to calculate the volume of sales or price to sell your services to break even on a monthly, quarterly, or yearly basis. It will also come in handy when presenting your business to potential investors or business partners.įor a step-by-step guide on how to calculate your break-even point (BEP), keep reading. Part of that planning will consist of knowing the amount of business you need to avoid being in the red and cover your overhead costs.Įven if you’ve been running your business for a few years, knowing when you’ll break even at various sales volumes for different products or services can help you better prepare for unprecedented situations like a pandemic or natural disaster. When starting a business, it’s recommended to plan for 12 to 15 months of cash flow to keep your business afloat as it gains traction.
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