Break-Even Point Calculator

Understanding the Break-Even Point (BEP)

The Break-Even Point is the exact moment a business stops losing money and inherently begins to generate pure profit. Operating below this line means your business is bleeding cash. Hitting this line means your revenue perfectly covers all of your expenses (Net Profit = $0).

To mathematically determine this point, you must rigorously separate your expenses into two distinct categories: Fixed Costs and Variable Costs.

1. Fixed Costs (The Overhead)

These are the expenses you must pay every single month regardless of whether you sell zero units or a million units. Their total value does not fluctuate with your sales volume.

• Commercial Rent & Leases
• Salaries for HQ / Administrative staff
• Software Subscriptions (SaaS)
• Business Insurance & Legal Fees

2. Variable Costs (The COGS)

These are expenses that exist only when you produce or sell a unit. The more units you sell, the higher your total variable cost climbs.

• Raw materials to build the product
• Direct hourly factory labor
• Packaging and shipping/fulfillment costs per order
• Stripe/Credit Card processing fees (e.g. 2.9% per transaction)

The Contribution Margin

The heart of break-even analysis is the Contribution Margin. This is simply your Selling Price minus your Variable Cost.

If you sell a luxury candle for $50, and it costs $30 in wax/shipping (Variable Cost) to make it, your Contribution Margin is $20. This means every time you sell a candle, you have exactly $20 left over to "contribute" toward paying off your Fixed Costs!

If your monthly rent (Fixed Cost) is $10,000, you simply divide $10,000 by your $20 contribution margin. The result? You must sell exactly 500 candles this month just to keep the lights on and break even.