Finance · Glossary
What is Break-Even Point?
Quick definition
The sales volume or revenue at which total costs equal total revenue. Above this, you make a profit; below, a loss.
Full explanation
The break-even point is the level of sales at which a business neither profits nor loses. Below it, the business loses money; above it, profits begin. Formula (units): Break-even = Fixed Costs / (Price per Unit − Variable Cost per Unit). If your fixed costs are $10,000/month, you sell a product for $50 that costs $30 to make, your break-even is 500 units. Break-even analysis is critical for new products, pricing decisions, and capital investments. A low break-even means less risk; a high break-even means more. It also helps set sales targets and evaluate marketing spend: a campaign that moves the break-even down is valuable.
Related calculators
Calculators that use or explain Break-Even Point.
Related terms
More from Finance
APR (Annual Percentage Rate)
The yearly cost of a loan, expressed as a percentage, including most fees. Used when borrowing money.
APY (Annual Percentage Yield)
The yearly return on a deposit or investment, including the effect of compounding. Used when saving money.
Compound Interest
Interest calculated on the initial principal AND on the accumulated interest from previous periods. The engine of long-term wealth.
Simple Interest
Interest calculated only on the original principal, not on accumulated interest. Used in short-term and consumer loans.
Principal
The original sum of money borrowed or invested, not including interest. The base on which interest is calculated.
Amortization
Spreading loan payments over time so each payment covers both principal and interest, with the loan fully paid off at the end.
Last reviewed: June 15, 2026 • Category: Finance