BREAK EVEN The break even point for a business is where total revenue is the same as total costs. At this point the business the business is making neither a loss nor a profit Break-even analysis separates costs into fixed or variables types, and is valuable because it calculates the point at which the business starts making a profit. the normal method used to calculate the break-even point is: fixed costs/(selling price - variable costs) Contribution is the difference between selling price and variable costs. A fixed cost is one that doesn't change depending on output. A break even chart shows how the business goes from profit to loss.