Break Even
Break Even
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What does it mean to break even?
What does it mean to break even?
To "break even" is to make enough profit on the items you are selling to cover the expenses (or running costs) of your business.
When you sell items, each item will cost you a certain amount in materials. You need to charge a price high enough to not only cover the cost of the materials as well as the additional expenses (like rent, salaries, etc).
Break Even Point
Break Even Point
Your break even point is the point at which your sales exactly cover your expenses. In other words...
How many do you need to sell to exactly cover your expenses.Break Even Formula
Break Even Formula
You can calculate the break even point with this simple formula:
Fixed Costs------------------------------Price Per Unit - Cost Per Unit
Break Even Chart
Break Even Chart
The break even analysis can be shown using this chart, which shows how fixed costs are stable regardless of output (or sales) while variable costs rise (in total) as the number produced rises.
This is shown relative to revenue (which also rises as sales rise).
Where the two curves (revenue and costs) meet, you are at the break even point.
Worksheet
Worksheet
In this exercise, you are to identify the break even point for a mobile hairdressing business.
Open the document and make a copy for yourself (or just click here:
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