Back to Glossary
Business Terms
Break-Even Point
Definition
The point where total revenue equals total costs, resulting in neither profit nor loss.
Overview
Break-even analysis helps understand how much you need to sell to cover costs. Beyond break-even, additional sales generate profit.
Example
With $5,000 monthly overhead and $100 profit per sale, break-even is 50 sales per month.
Best Practices
Calculate break-even to set sales targets and evaluate pricing strategies.
Common Mistakes to Avoid
Forgetting variable costs
Not updating as costs change
Ignoring break-even in pricing
Frequently Asked Questions
How do I calculate break-even?
Fixed Costs ÷ (Price - Variable Cost per Unit) = Break-even units.