Every business relies on a steady cash flow to ensure its growth and success. This flow covers payroll, inventory costs, monthly payment costs, and other draws. Our break-even calculator can help you as a business owner to measure your cash flow, allowing you to take necessary action to ensure that your operations are running smoothly. It can mark your break-even point, for example, which lets you make future financial decisions as well as other variables.
If you run a cupcake shop, how many cupcakes do you think you’ll sell?
You will break even afterselling 0 units for $
You won’t break even with the current numbers.
Turn things around by lowering your unit costs or raising prices.
If you’re a new business owner or plan on starting one, there are a few financial things you should know. The first is what break-even means. This point is when total cost and total revenue are equal. In other words, at the break-even point, your business has reached a level of production where costs of production equal the revenue of your products.
As you can see from our calculator, you’ll need to know four important variables:
Most of these are self-explanatory, but here is some detailed information.
This is the number of units that your business is expected to sell within a given period, such as per month, quarter, six-month window, or year.
This is the price per unit that you’ll sell.
This is the cost of producing each unit.
This cost doesn’t change with the increase or decrease in the amount goods sold or produced. They are expenses that need to be paid off by the company, free of any business activity. This means that fixed costs are mostly indirect and don’t apply to the production of goods.
Profit
This is the revenue minus total costs of production and other factors needed to run your business.
This is the sum of all costs by a company resulting from the production of a certain amount of output of a good or service.
The total revenue is the complete amount of sales of goods and services. One thing to keep in mind is the marginal revenue, which measures any increases in revenue resulting from selling more products and services.
The total variable cost is the total number of expenses that change depending on how much the business produces or sells a product or service. Variable costs increase or decrease depending on sales volumes.
A variable unit cost is the production cost for any units that are affected by changes in a company’s activity level (output).
Our break-even calculator is specifically designed to make its use as convenient and seamless as possible. We understand that dealing with so many financial variables can be tricky and even scary at times. Our calculator eliminates that fear since all you have to do is input all of the necessary variables in each appropriate box and the calculator will do the rest.
Recommended articles:
What do you need to know to calculate your break-even point?
In order to calculate your company’s break-even point, you’ll need to know your fixed cost per unit, average selling price per unit, variable cost per unit, and expected unit sales. These three are important when using our calculator.
How can the break-even point help a business?
Knowing your break even point allows you to take a step back and reassess what you’re doing as a business owner to ensure that your company stays afloat in a competitive market without burning a hole in your pocket.
What is an ideal break-even point?
Your break-even point will depend on your business model. The general consensus is that the lower the break-even point, the better. If your break-even point is low, you have a higher chance of generating a profit.
What is the difference between fixed and variable costs?
Fixed costs tend to remain the same no matter what your production output is. These costs include rent, interest payments, business insurance, etc. On the other hand, variable costs change based on your output and are usually materials, labor, commissions, etc.
Free Business Plan Resources
Find more answers to your questions about creating a business plan in our free library of articles and resources
Ready to Start Your Business?
Form Your LLC