What Is the
Break-Even Point?
The break-even point is the point where a company’s revenues
equals its costs. The calculation for the break-even point can be done one of
two ways; one is to determine the amount of units that need to be sold, or the
second is the amount of sales that need to happen.
The break-even point allows a company to know when it, or one of
its products, will start to be profitable. If a business’s revenue is below the
break-even point, then the company is operating at a loss. If it’s above, then
it’s operating at a profit.
