There are two sets of costs, fixed and variable.
Note: The sample Excel workbook used in this walk-through is available for download. Along the way, we'll assume a lot about your financial expertise - this is an Excel lesson, not a financial business lesson. In this article, we'll build a BEP profit model in 10 steps. It's a best-guess point that provides insight into how profit (and loss) changes as your sales go up and down. When determining the BEP, keep in mind that it isn't a magic number. You'll need a few variables to calculate the BEP: In other words, anything over the BEP is profit anything under is loss.
At this point, the product has profit, but you're covering your costs. The break-even point (BEP) is the point where costs equal revenue (sales). Part of that decision process is often a break-even analysis. Knowing the right price to charge for a product or service can make or break your business.
