How to calculate the break-even point in Finmap

The break-even point shows how much revenue you need to cover all your expenses and reach zero. Everything above that amount is profit.

In Finmap, you can calculate it using custom metrics in the Financial Indicators report.

Formula

The classic formula looks like this:

Break-even point (in money) = Fixed costs ÷ ((Price per unit − Variable costs per unit) ÷ Price per unit)

Finmap records transactions in money, without the number of units, so there is no price per unit. But you don’t need it to calculate break-even in money. If you take the total amounts of expenses and income, the result is the same. So the formula can be simplified:

Break-even point = Fixed costs ÷ (1 − variable cost ratio)

Which costs are fixed and which are variable

Variable costs grow along with sales. The more you sell, the more you spend. For example: purchasing goods, delivery, payment system fees, sales managers’ commissions.

Fixed costs are what you pay every month regardless of how much you sold. For example: rent, fixed salaries, service subscriptions, accounting.

If an item is mixed (for example, a manager’s salary consists of a base rate and a commission), you can split the payment into several categories: count the base salary as a fixed cost and the bonuses as a variable cost.

Step 1. Create a custom metric “Variable cost ratio”

Open the Financial Indicators report and click + Custom metric.

When creating the metric:

• A – Expenses: select your variable cost categories.
• Action: ÷
• B – Income: select your revenue categories.
• Turn on the percentage display.

The metric will show what share of each hryvnia of revenue goes to variable costs.

Step 2. Calculate the break-even point

Take the total fixed costs for the same period and plug them into the formula:

Fixed costs ÷ (1 − variable cost ratio)

Make sure the period is the same. If you’re looking at the variable cost ratio for October, take fixed costs for October too.

Example

Fixed costs are UAH 100,000 per month. The variable cost ratio is 60%.

100,000 ÷ (1 − 0.6) = 100,000 ÷ 0.4 = UAH 250,000

That’s how much monthly revenue you need to break even.

Let’s check: of UAH 250,000 in revenue, 60% (UAH 150,000) goes to variable costs. That leaves UAH 100,000, which covers the fixed costs.

Tip

Recalculate your break-even point once a month or after noticeable changes: rent went up, you switched suppliers, you hired someone. This way you’ll always know the minimum sales volume your business needs.