How many products will you need to sell in order to cover your cost and at what level of sales will your business make a profit?
To answer this you will need to calculate and find what is the breakeven point of your business.
Breakeven point (or breakeven analysis) is the point in which expenses are covered, and anything that is sold above that point means that your business is making a profit.
Calculating the breakeven point is done by defining the relationship between expenses and revenues and understanding how expenses/cost will change as sales increase or decrease. Let’s look at how it’s done.