How break-even analysis works
Your break-even point is the level of sales at which total revenue exactly covers total costs, so you make neither a profit nor a loss. Below it you are losing money; above it every sale contributes to profit. Knowing this number turns vague hope into a concrete target: it tells you exactly how much you must sell to keep the lights on before anything you earn is actually profit.
The calculation rests on three inputs. Fixed costs are the expenses that do not change with sales volume — rent, salaries, insurance, subscriptions. The selling price is what a customer pays per unit. The variable cost per unit is what each sale costs you — materials, packaging, payment fees. The gap between price and variable cost is the contribution margin: the amount each sale contributes toward covering your fixed costs.
Break-even in units is simply fixed costs divided by the contribution margin per unit. If your fixed costs are 20,000 a month, you sell at 100 and each unit costs you 40, your contribution is 60 and you break even at 334 units — and multiplying by the price gives the break-even revenue. This tool does all of that instantly and shows how the point moves when you change price, costs or overheads, so you can test scenarios before committing.
Break-even analysis is invaluable when setting prices, planning a launch, or deciding whether you can afford a new hire or lease. Tallium tracks your real fixed and variable costs as you trade, so your break-even target stays current instead of being a one-off spreadsheet you forget to update.
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