Back to Break Even

One of the early posts to this blog was how to calculate break even. The formula is:

Break-Even = Fixed Cost/Gross Margin %

So now we see the key metrics beginning to help us manage. Let us say your fixed costs per month are $10,000, your GM% is 25%, you calculate your monthly break even is $40,000. So you now know that you must sell more than $40,000 each month Before You Start To Make A Profit.

It doesn't make it any easier, but at least you know what you have to do.