Understanding Your Breakeven Point

One of the most critical financial concepts for business success is knowing your breakeven point—the point where your revenue covers your total costs, and you neither make a profit nor a loss. Understanding this will help you set realistic pricing, manage expenses, and make informed business decisions.

This module will cover:

  1. What a breakeven point is

  2. How to calculate it for your exercise physiology business

  3. Adjusting your pricing and expenses for profitability

1. What is Your Breakeven Point?

Your breakeven point (BEP) is the amount of revenue needed to cover all fixed and variable costs. Once you surpass this point, your business starts making a profit.

Key Terms to Understand:

  • Fixed Costs: Expenses that stay the same regardless of the number of clients (e.g., rent, software subscriptions, insurance, admin salaries).

  • Variable Costs: Expenses that fluctuate with the number of clients (e.g., session-based wages, consumables, travel expenses).

  • Revenue: Money earned from client sessions, group classes, and other services.

Formula for Breakeven Point:

2. How to Calculate Your Breakeven Point

Let's break it down with an example.

Step 1: Identify Fixed Costs

Assume your monthly fixed costs include:

  • Rent: $2,000

  • Insurance & Licenses: $500

  • Software (Cliniko, Xero, etc.): $200

  • Admin Staff Salary: $3,000

  • Miscellaneous: $300

Total Fixed Costs: $6,000/month

Step 2: Identify Variable Costs Per Session

For each session, you may have:

  • Contractor payment per session: $40

  • Consumables (bands, tape, etc.): $5

  • Other minor session-related costs: $5

Total Variable Cost Per Session: $50

Step 3: Determine Your Revenue Per Session

Let’s say you charge clients $120 per session.

Step 4: Apply the Breakeven Formula

Breakeven point = 6000 / (120-50) = 85.7 (sessions per month

Step 5: Convert to Weekly Goals

If you operate 4 days a week, you need: Rounded up, this means you need 22 sessions per week to cover costs.

3. Adjusting Your Pricing and Expenses for Profitability

Once you know your breakeven point, you can make strategic decisions:

1. Increase Your Revenue Per Session

  • Raise prices slightly ($130 instead of $120 can make a big difference!).

  • Add small-group training (more clients per session, increasing revenue per hour).

  • Upsell additional services like online programs, telehealth, or assessments.

2. Reduce Fixed Costs

  • Negotiate lower rent or work from a shared space.

  • Minimize admin costs by using automated scheduling systems.

  • Optimize marketing strategies to rely on organic referrals instead of paid ads.

3. Reduce Variable Costs Per Session

  • Buy equipment in bulk to reduce per-unit cost.

  • Optimize session structures to require fewer consumables.

  • Reduce contractor reliance by scheduling clients more efficiently.

Conclusion & Next Steps

  • Calculate your personal breakeven point using your own costs and revenue.

  • Set realistic client booking goals based on this number.

  • Use your breakeven point to make strategic financial decisions (e.g., when to hire staff, increase pricing, or expand services).

By understanding and tracking your breakeven point, you’ll gain confidence in managing your finances and ensuring your exercise physiology business is both sustainable and profitable.