Hitting your break-even point
You’ve gone into business, whether for a new challenge, a better work-life balance, or to take a punt on the next big idea. The reasons we go into business vary, but one thing we all share is a desire to make some money doing it.
That crucial break-even point is the moment you move from just covering your costs to generating profit – and it’s worthy of a celebration!
At Auctus, our advisory and service offerings help clients with their business operations and their accounting. Whether you’re launching a new business or navigating a growth phase, understanding your break-even point is a powerful step towards more confident, informed decision-making and puts a clear line in the sand for your financial success.
What is your break-even point?
Your break-even point is the moment when your total revenue equals your total costs. In plain terms, it’s when your business stops losing money and starts turning a profit.
Until you hit this number, you’re essentially paying to stay open. Once you pass it, every sale contributes directly to your bottom line.
How do you know where your break-even point is?
We’ve worked with business owners at every stage of their journey. One thing we’ve noticed is that those who understand their numbers can make better, more confident decisions.
Knowing your break-even point helps you:
- Price with purpose – Understand the true cost of your products and services.
- Control your costs – See clearly how overheads affect your profitability.
- Plan for growth – Set realistic revenue goals and map out when expansion makes sense.
- Make confident calls – Whether you’re hiring, investing in marketing, or launching something new, your break-even point tells you exactly what you’re working toward.
Dollars and units: how to calculate your break-even point
There are two main ways to calculate your break-even point: in dollars or in units sold.
Break-Even Point (in dollars):
Fixed Costs ÷ (1 – Variable Costs ÷ Sales Price)
Break-Even Point (in units):
Fixed Costs ÷ (Sales Price – Variable Cost per Unit)
What counts as fixed and variable costs?
- Fixed Costs: Rent, salaries, insurance –these stay the same, no matter how much you sell.
- Variable Costs: Materials, commissions, packaging– these increase as your sales do.
A quick example
Let’s say you run a florist business:
- Fixed costs = $80,000 per year
- Service package = $4,000 per project
- Variable costs = $1,000 per project
Break-even point = $80,000 ÷ ($4,000 – $1,000) = 27 projects per year
That means you need to complete 27 projects annually before you start making a profit.
Ready to work it out?
You don’t have to go it alone. At Auctus, we do more than crunch numbers – we help you understand them too.
If you’re ready to uncover your break-even point and build a stronger financial foundation, let’s talk. We’d love to walk that journey with you.
Get in touch with one of our advisors today.
