Breakeven Point

The breakeven point is the level of sales at which total revenues equal total costs, meaning no profit or loss is made. It indicates the minimum amount a business needs to sell to cover all expenses, including fixed costs (like rent and salaries) and variable costs (like materials). Once sales surpass this point, the business begins to generate profit; before reaching it, the company operates at a loss. Understanding the breakeven point helps businesses plan pricing, control costs, and set sales targets for financial stability.