Breakeven Analysis Excel Spreadsheet

A break-even analysis is a financial calculation used to determine a company's break-even point (BEP). In general, lower fixed costs lead to a lower break-even point. A business will want to use a break-even analysis anytime it considers adding costs—remember that a break-even analysis does not consider market demand.

Benefits of a break-even analysis

Price smarter

• Finding your break-even point will help you price your products and services smarter. A lot of psychology goes into pricing, but knowing how it will affect your profitability is just as important, especially when making sure that you can pay all your bills.

Catch missing expenses

• It’s easy to overlook expenses when you’re thinking through a new business idea. When you complete the break-even analysis, you have all of your financial commitments figured out, limiting surprises in the future.

Set revenue targets

• After completing the analysis, you will know exactly how much you need to sell in order to be profitable. This sets sales goals for your business. When you have a number in mind, it will be easier to follow through.

Make smarter decisions

• Helps limit business decisions made based on emotions. How you feel is important, but it shouldn't be the basis of your business decisions. The break-even analysis will help you start your business based on facts.

Limit financial strain

• Mitigates risk by showing when to avoid a business idea. It helps potential businesses avoid failure as well as limit the financial toll of a bad idea through realistic analysis of potential outcomes.

Fund your business

• The break-even analysis is usually a requirement in order to take on investors or debt to fund your business. It proves that your plan is viable, which will also help you feel better about taking on financing.

Getting started

Use our Breakeven Analysis Excel Sheet to create your break-even analysis and determine your business’s break-even point in units using the following formula:

Fixed Costs ÷ (Price - Variable Costs) = Break-Even Point in Units

What you need to get started:

This analysis will help you easily prepare an estimate and a visual to include in your business plan. We’ll do the math, and all you will need is an idea of the following information:

• Your business's estimated fixed costs
• Your business's selling price per draw
• Your business's projected unit sales
• Your business's estimated variable cost per draw