The break even point occurs when a project, be it a new product or a complete business model, is not longer a capital drain but an actual source for new capital. As projects cost money to develop and implement, the revenue coming in from the launch will be filling in the gap created by its development, and it will only start to actually make you money once it pays off it’s initial cost. Depending on the total cost and the perceived value of the project, the time to break even will vary.
Variable costs+fixed costs = Revenue
(Duration in months between the launch date and the BEP for project A + Duration in months between the launch date and the BEP for project B + Duration in months between the launch date and the BEP for project C .... + project N) / Number of projects launched
Example of KPI target
4 months to BEP
CEO, CFO, Sales Manager
Breakeven Point (BEP)
Planned breakeven point to actual breakeven point