3. Estimate the selling price of the product

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How the break-even point is calculated and used in practice
At the beginning of the article, we mentioned in general terms what the breakeven point is for and what it shows. Next, we will learn: what to do after we have managed to find the breakeven point.

1. Estimate on what day of the month the company reaches the breakeven point
If the company reaches the break-even point in the middle of the month, this is a good indicator. If later, then this is a risk for the business. In the case of long downtimes and force majeure circumstances, you will not have a reserve of time to recoup all the invested funds.


In the example, the company reached the breakeven point late, which means the risks to the business are too high.
2. Next, analyze all your expenses.
Break-even point analysis allows you to understand at what planned price of goods and at what volume of production the business will be able to recoup the projected expenses . And if after the calculations you are not satisfied with the final indicator, then you should improve one of these parameters. It is worth starting with a detailed study of the cost model.

The breakeven point will help you identify the structure of your fixed and variable costs. Their ratio can be varied depending on the situation and profitability of the business. For example, in difficult times, you can reduce fixed costs and increase variable costs faster.

A striking example is the coronavirus pandemic. At that time, many companies suffered losses. And in order to somehow reduce costs, many companies could:


If the company itself and production volumes are growing, you manage to earn a profit, then it is worth doing the opposite. Increase the share of fixed costs and try to reduce variable ones. With a large production volume, this is more profitable.


The price of the product is an equally important factor that affects the break-even finland phone number list point in money. Perhaps the price may be too low or, conversely, too high. And this is where problems arise.

In this case, you need to organize various marketing research, better study your target audience, its needs. You should find out what pricing policy your competitors have.

It is necessary to set a correct and objective price for the product in order to:

on the one hand, you had the opportunity to realize the maximum possible sales volume, that is, not to overcharge;
on the other hand, it would be possible to get a good margin from each product sold, that is, not to make the price too low.
Calculation of the financial safety margin
It is known that calculating the break-even point shows what parameters of price, sales volume, and costs should be adhered to in order to avoid ending up in the red.

The breakeven point can be useful not only at the planning stage, but even during the preparation and analysis of financial statements. For this purpose, the zero profit point is compared with the current revenue of the company.