Break-Even Point

Break-even point means the level of sales where revenue equals total costs. In simple terms, it is the point where a business is no longer losing money but not yet making profit. Break-even point is important because it helps investors understand how much sales volume a company needs to cover its costs. Reaching break-even can be an important milestone for young or growing companies. For example, if a business needs to sell 10,000 units to cover all costs, 10,000 units is its break-even point. Break-even point is not the same as strong profitability. It only means the company is covering costs, not generating large profits.