Use this BEP calculator to quickly identify the number of units you need to sell to cover all your costs, enabling you to make strategic pricing and cost management decisions and ultimately guide your business toward profitability.

What is BEP, Anyway?

The break-even point (BEP) is the level of production or sales at which total revenues equal total costs, resulting in no profit or loss. It is a critical financial metric used to determine the sustainability of a business’s pricing strategy and cost structure.

BEP Formula:

Break Even Point (Units) 🟰 Fixed Costs ➗ (Price per Unit ➖ Variable Costs per Unit)

Examples

Company A:

• Fixed Costs: $10,000
• Variable Costs Per Unit: $50
• Price Per Unit: $100
  • BEP: 200 units
  • Company A needs to sell 200 units to cover all its costs. Any sales beyond 200 units contribute to profit.

Company B:

• Fixed Costs: $20,000
• Variable Costs Per Unit: $20
• Price Per Unit: $80
  • BEP: ~333.33 units
  • Company B needs to sell approximately 334 units to cover all its costs. Any sales beyond 334 units contribute to profit.

TL;DR: The break-even point (BEP) is when a business’s total revenue equals its total costs. It is a key metric for businesses to track because it can help them understand their financial performance and make informed decisions about pricing and marketing. Reaching the BEP means a business is not making a profit, but it’s also not losing money. Sales beyond the BEP contribute to profit.