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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?
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 price a product or service.
Do some research and find competitor's prices.
Then try to establish your prices.
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What are the competitor's prices?
The Break-even analysis helps you determine profitability.
The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a fiscal quarter or year.
Revenue generation is one of the most important activities any business can engage in.
It is defined as a process by which a company plans how to market and sell its products or services, in order to generate income.
