Understanding Your Business Break-even Point

Abstract

To find your business’s break-even point, you need to know your fixed costs (like rent, salaries, and insurance) and variable costs (like supplies or materials for each job). The break-even point is reached when your total revenue equals total costs, meaning you cover all expenses but don’t make a profit yet. For example, in a cleaning service, you calculate how many jobs you must complete each month to pay for both fixed and variable costs. If the number of jobs you expect to get is less than this, you may need to raise prices, lower costs, or find ways to get more customers.