break even analysis calculator and graph

A business will want to use a break-even analysis anytime it considers adding costs-remember that a break-even analysis does not consider market demand.In general, lower fixed costs lead to a lower break-even point. A break-even analysis is a financial calculation used to determine a company’s break-even point (BEP).A break-even analysis reveals when your investment is returned dollar for dollar, no more and no less, so that you have neither gained nor lost money on the venture.

At that point, you will have neither lost money nor made a profit. In other words, it reveals the point at which you will have sold enough units to cover all of your costs. What Is Break-Even Analysis?Ī break-even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. It can tell you whether you may need to borrow money to keep your business afloat until you’re pocketing profits, or whether the endeavor is worth pursuing at all. A break-even analysis will reveal the point at which your endeavor will become profitable-so you can know where you’re headed before you invest your money and time.Ī break-even analysis will provide fodder for considerations such as price and cost adjustments. It’s wise, however, to limit your risk before jumping in. Or, you might just be thinking about expanding a product offering or hiring additional personnel. You may have an idea that spurs you to open a business or launch a new product on little more than a hope and a dream. East, Nordics and Other Regions (opens in new tab)

Break even analysis calculator and graph