SBA Break Even Analysis

Breakeven analysis allows businesses to determine when they will be able to cover all expenses to begin making a profit, a helpful tool in analyzing costs and profits. Explained in the article is how to find a breakeven point, which uses the following formula:


Breakeven Point =Fixed Costs (Unit Selling Price- Variable Costs)


Applicability to Business

  • A breakeven point shows when a business may begin making a profit (necessary for pricing)
  • Breakeven analysis provides a goal-setting measure for a business

Learning Outcomes

  • Identify business’s fixed and variable costs in addition to a potential unit selling price
  • Use the above formula to determine a breakeven point