What is the break-even point?

The break-even point is where total revenue equals total costs. Below it, you lose money; above it, you make profit.

How can I lower my break-even point?

You can lower it by reducing fixed costs, increasing the price per unit, or reducing variable costs per unit.

Calculate the break-even point where your total revenue equals total costs.

Calculate the break-even point where your total revenue equals total costs.

Fixed Costs*

Price per Unit*

Variable Cost per Unit*

Coffee shop

Fixed costs: $8,000/month, price: $4, variable cost: $1.50

3,200 cups/month

Software product

Fixed costs: $50,000, price: $99, variable cost: $10

560 units

Forgetting to include all fixed costs

Fix: Include rent, salaries, insurance, utilities, and any other costs that do not change with production volume.

Underestimating variable costs

Fix: Include all per-unit costs: materials, labor, packaging, shipping, and transaction fees.