For example, if you have been selling online and you are now thinking about opening a pop-up shop, you will have to make sure you at least break even so as not to add a strain to your business.
If you are thinking about changing your business model, for example, switching from a retail store to e Commerce, you are required to do a break-even analysis.
If you are starting your business from the scratch, you should never rely on guesswork to estimate your costs.
You can check with trade associations for information on average costs in your particular industry.
Variable costs are costs that fluctuate based on the amount of products you sell.
This could include things like materials, commissions, payment processing, labour, shipping costs of the product, and inventory etc.
A company can be said to have achieved break even when its total sales or revenue equals its total expenses.
No profit has been made at the break even point, and no losses have been incurred either.
Some costs could go in either category, depending on your business.
If you have salaried staff, they will go under fixed costs.