What is Break-Even Point?
A corporation breaks even when its revenue equals its expenses. At the break-even point, a company can pay its COGS and operational expenses with sales but is not yet profitable. Fixed costs (costs that don't change with production or sales volume) divided by contribution margin yields it (the difference between the price of a product or service and its variable costs). Units, dollars, or percentages can express the break-even point. It helps organizations calculate the minimal sales needed to cover costs and the best pricing, production, and product mix.