Break-Even Point
Break-Even Point (BEP) is the level of sales where your total revenue equals your total costs — meaning wala ka pang kita, pero hindi ka rin lugi.
It tells you the minimum amount you need to sell to cover all your expenses.
In Filipino MSME terms: ito yung “kailan ka babawi” — the point where your puhunan and gastos are fully recovered.
Why Break-Even Point Matters
For Filipino MSMEs, knowing your BEP helps you:
- Set the right prices — so you don’t underprice your products
- Know your sales targets — daily, weekly, or monthly
- Control costs — by seeing which expenses push your BEP higher
- Decide if a business idea is viable — before investing too much
- Plan promotions — without accidentally selling at a loss
Many Filipino businesses operate without knowing their break-even point, which leads to underpricing, overspending, or unrealistic expectations.
Example / Context
Example 1 (Carinderia):
Your monthly expenses (rent, ingredients, gas, utilities) total ₱40,000.
Your average profit per meal is ₱40.
Your BEP is 1,000 meals per month.
Example 2 (Online Seller):
You spend ₱15,000 monthly on inventory, shipping, ads, and packaging.
Your average profit per item is ₱150.
Your BEP is 100 items per month.
Example 3 (Freelancer):
Your monthly expenses (internet, software, rent, equipment amortization) total ₱20,000.
Your average profit per project is ₱5,000.
Your BEP is 4 projects per month.
Related Terms
FAQs
1. How do I compute my break-even point?
Formula: Break-Even = Total Fixed Costs ÷ (Selling Price − Variable Cost).
This tells you how many units you need to sell to break even.
2. Is break-even point only for products?
No. It applies to services, food businesses, retail, online selling, and even freelancers.
3. What increases my break-even point?
Higher expenses, lower selling prices, or lower profit margins.
4. What decreases my break-even point?
Lower expenses, higher prices, or better margins.