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Find out how much money you need to start a business with a break-even analysis.
It will help you determine when your business will become profitable.
Use this formula to find the break-even point.
Fixed Costs / (Average Price – Variable Costs) = Break-Even Point
The break-even point is the level of production at which the costs of production equal the revenues for a product.
Fixed Costs / (Average Price – Variable Costs) = Break-Even Point
What is the break-even point?
Variable costs are costs that change as the quantity of the good or service that a business produces changes. Variable costs are the sum of marginal costs over all units produced.
What are the variable costs?
To calculate the average purchase price of your shares you have to divide the total amount invested by the total number of shares bought.
What is the average price?
Fixed expenses or costs are those that do not fluctuate with changes in production level or sales volume.
They include such expenses as rent, insurance, dues and subscriptions, equipment leases, payments on loans, depreciation, management salaries, and advertising.
What are the fixed costs?
The Break-even analysis helps you analyze the data.
The Break-even analysis helps you price a product or service.
The Break-even analysis helps you determine profitability.
