Break-even point

• The calculation: your fixed costs divided by what you keep from each sale
• Fixed costs: what you pay regardless of your sales (rent, base salaries, software)
• Variable costs: what increases when you sell more (materials, delivery, transaction fees)
• Below this threshold, you lose money; above it, each sale adds to the profit;

Imagine a café: until the day's customers have paid the rent, electricity, and waiter's wages, the owner is operating at a loss; the first sale that exceeds these costs marks the beginning of profit. Knowing this break-even point tells you how much you need to sell each month before making any money, and helps you set prices, decide on hiring, or evaluate a new location. Many entrepreneurs calculate it once and forget about it, while every increase in costs shifts it. To make it a true dashboard, Bankeo connects you with a verified accountant/CPA free of charge—one who talks about profitability, not just taxes—and we'll be there to support you every step of the way.

In simpler terms, what is the break-even point?

This is the sales threshold at which you stop losing money. Below this threshold, your sales don't yet cover all your expenses; once you exceed this threshold, each sale starts to generate a profit. It's also called the break-even point, because it's the point where you're neither losing nor making a profit.

How do I calculate my break-even point?

You divide your fixed costs (those that don't change: rent, base salaries, software) by what you have left on each sale after paying your variable costs (materials, shipping). For example: you sell a service for $100 that costs you $60 in variable costs, so you have $40 left per sale; with $80,000 in fixed costs per year, you need 2,000 sales to break even. Each additional sale is profit.

How often should I recalculate it?

Whenever something significant changes—a rent increase, a new hire, a new price, a new product line—a review every three months is a good frequency for an SME. If you want to transform this calculation into a true management dashboard, Bankeo will connect you with a verified accountant/CPA free of charge—one who focuses on profitability, not just taxes—and we'll be there to support you every step of the way.