Enter the total fixed costs of your project or good and the total sale price per unit sold to calculate the total number of units needed to break even.
Break Even Point Formula
The formula for calculating the break even point of a business or good is the following.
BEP = TFC / SPPU
- Where BEP is the break even point in units sold
- TFC is the total fixed costs
- SPPU is the sale price per unit
This formula assumes that you are attempting to determine the total number of goods you need to sell in order to break even. With that said, sometimes you are not look for the number of units sold to break even, you are instead looking for the total fixed cost that you would break even at given a set sale price and number of units. In this case, the formula would be
TFC= BEP * SPPU
As you can see from the formulas above, the break even point depends on the cost and the sale price. The only way you can change the break even point then, is by manipulating those values. You can explore that using the calculators above, or using one of the other finance calculators.
How to calculate a break even point
Let’s look at an example of how you might calculate the break even point of a good.
First, you must determine the total fixed costs. Typically this is equal to the total number of units multiplied by their cost. More often you need to include the operational and distribution costs.
Next, you must determine the cost of a unit. This is usually chosen, and can be manipulated to adjust the break even point.
Finally, enter the values into the break even point calculator above, and you have your answer.