Business & Sales

What Is the Break-Even Point?

The break-even point is the level of sales at which total revenue exactly equals total costs, so there is neither profit nor loss. In units, break-even = fixed costs ÷ (price per unit − variable cost per unit). Sales above this point generate profit; sales below it generate a loss.

Example

Fixed costs of 12,000 a month, a price of 50, and a variable cost of 30 per unit give a contribution margin of 20 and a break-even point of 600 units a month.

Break-Even in Revenue

Break-even revenue = fixed costs ÷ contribution margin ratio, where the ratio is (price − variable cost) ÷ price.

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🔗 Related Terms

Contribution Margin Profit Margin Revenue Return on Investment (ROI)

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.