What is Breakeven Analysis?
Nexa Consultancy | Startup & Finance Glossary
Breakeven analysis determines the point at which total revenue equals total costs (both fixed and variable), resulting in zero profit or loss. It is a crucial tool for understanding the sales volume needed to achieve profitability.
For Startups: For a pre-revenue startup, breakeven analysis helps set initial sales targets. For a growing startup, it informs pricing decisions and cost management strategies. Investors use it to assess the viability and risk of a business plan. You can use our Breakeven Calculator to run your own analysis.
Calculation: Breakeven Point (in Units) = Total Fixed Costs / Contribution Margin per Unit
Example: A company with ₹1,00,000 in fixed costs and a contribution margin of ₹50 per unit needs to sell 2,000 units to break even.