What is Break-Even Analysis?
- Break-Even Analysis
- Break-Even Analysis calculates the sales volume or revenue at which total revenue equals total costs — the point of zero profit or loss.
Break-Even Formula
Break-Even Units = Fixed Costs / (Selling Price per Unit − Variable Cost per Unit). Contribution Margin per unit = Selling Price − Variable Cost. A lower contribution margin requires higher sales volume to break even. This analysis is critical for pricing decisions and capacity planning.
Using ERPNext Data for Break-Even
Extract fixed cost totals from ERPNext's P&L (rent, salaries, depreciation are largely fixed), variable cost per unit from the BOM costing report, and selling price from the Item Price. Build the break-even model in the ERPNext Analysis tool or export to Excel for the finance team.
Infonoxe Technologies specialises in ERPNext implementation and custom software for Indian businesses.
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