Getting to break even is the first step toward profitability. The calculations aren't difficult: If you can accurately forecast costs and sales, a breakeven analysis is a matter of simple math. You've broken even when your total sales or revenues equal your total expenses.
First, we'll define what comprises costs. The most important terms are "fixed" and "variable" costs:
As far as revenues go, for the purposes of calculating breakeven, it's typically documented in terms of unit pricing, which refers to the amount you plan to charge customers to buy a single unit of your product. To get to a unit cost, it may help to define a couple of common methods for overall pricing; (there are many, but these are the most prevalent):
(This About.com article offers an overview of common pricing methods.)
Once you have a handle on costs and revenues as defined above, the breakeven formula is fairly simple: Take your fixed costs, divided by your price, minus your variable costs. If you prefer to view it as an equation, it's defined as: Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs).
Source: How to Do a Break-even Analysis, About.com Entrepreneurs
Salem Five Resource
Easily Calculate Your Breakeven
Salem Five's Breakeven Analysis Calculator can help you figure out when your next project will start to earn beyond your investment.