Break-Even Analysis Explained in 5 Minutes
About This Video
Break even analysis, also called breakeven analysis, shows how to find the break even point (breakeven point or break-even point) where total revenue equals total costs. If you’re asking “what is break even analysis,” “what is a breakeven analysis,” “what is break-even analysis,” or “what is break even point,” I explain break even analysis meaning and the function of break even analysis in business planning. Learn how to calculate break even point using fixed costs and contribution margin, with a break even analysis example showing why a meal-kit business needs 5,000 orders or $250,000 in sales to cover its costs. A clear break-even chart connects the numbers to the revenue and cost lines, making determining a breakeven point easier to understand. I also explain how price cuts change the result, how to calculate sales for a target operating profit, and how margin of safety measures the cushion between forecast sales and break even.
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Chapters
0:00 – Break-Even Analysis Explained
0:49 – Fixed Costs, Variable Costs and Contribution Margin
1:45 – Break-Even Point in Units
2:34 – Break-Even Sales in Dollars
3:05 – How a Price Cut Changes Break-Even
3:43 – Calculating a Target Profit
4:09 – Margin of Safety
4:34 – Further Learning
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*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Ryan O’Connell Finance LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.
