Break-Even Point
The break-even point is the sales level at which your total revenue exactly equals your total costs — you're not making a profit, but you're not losing money either.
Break-Even Point Definition
The break-even point (BEP) is the level of sales where total revenue equals total costs. Above break-even, you're profitable. Below it, you're losing money.
How to Calculate Break-Even
Break-Even Point = Fixed Costs ÷ (Price per Unit – Variable Cost per Unit)
Example: Your fixed costs are $5,000/month. You sell a product for $50 with $20 in variable costs per unit.
For service businesses: BEP = Fixed Costs ÷ Gross Margin Percentage
Why Break-Even Matters
FAQ
Q: How do I find my break-even in QuickBooks?
A: Run a P&L report, identify your fixed costs (rent, salaries, insurance) and variable costs (COGS, materials). Use the formula above. QuickBooks doesn't calculate BEP directly, but the data is all there.
Related Terms
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Related Terms
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