Break Case

Break-even point is the point at which the business is producing sufficient income each month to cover all your fixed and uneven costs. Once business reach this point, any additional earnings generated each month are profit.

Estimating as exactly as you can when you will reach this point is an estimated part of your business plan. In other words, you need to work out exactly how much you will need to sell each month, and at what price, to break even.

Before you can work this out you need to determine your start-up expenses and monthly running expenses, taking into account any fixed expenses, such as repayments on loans, salaries, etc, as well as variable expenses, expenses which will vary depending on how much you sell, such as developed expenses, freelance expenses, etc.

Although, break-even analysis is a very useful risk evaluation technique and a useful device for testing the sensitivities of business performance, the following limitations must be considered:

All costs resolved into fixed or variable

Variable costs fluctuate in direct proportion to volume.

Fixed costs remain constant over the volume range.Break-even point is the point at which the business is producing sufficient income each month to cover all your fixed and uneven costs. Once business reach this point, any additional earnings generated each month are profit.

Estimating as exactly as you can when you will reach this point is an estimated part of your business plan. In other words, you need to work out exactly how much you will need to sell each month, and at what price, to break even.

Before you can work this out you need to determine your start-up expenses and monthly running expenses, taking into account any fixed expenses, such as repayments on loans, salaries, etc, as well as variable expenses, expenses which will vary depending on how much