Calculating Your Break-Even Point
Budgeting your operations and calculating your break-even point is simple at its core. Determine your operating costs, including both fixed and controllable and find the point where your sales have covered your costs.
To determine your break-even point or your operating cost, first, tally your fixed expenses. These are rent, utilities, supplies – anything that you’d need to have regardless if you produced one unit or fifty.
Your variable costs function as a percentage of units sold or services provided and will rise and fall according to how many units you produce.
Your profit can increase if you control your variables, as producing multiple units typically only involves more manpower and supplies, not additional lease monies, insurance, and so forth.