The Break-even Point

The break-even point is the level of sales at which a business's total revenue equals its total costs, resulting in neither profit nor loss. It marks the threshold where the company covers all fixed and variable expenses. Knowing this point helps business owners understand how much they need to sell to stay afloat. Beyond this point, each additional sale contributes to profit; below it, the business is losing money. Essentially, the break-even point is the critical sales volume needed to ensure the business remains financially sustainable.