What is the Break-Even Point

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The break-even point is a crucial financial metric that determines the minimum amount of sales a company needs to cover all its costs. At this point, the business makes no profit and sustains no loss. It is calculated by dividing the total fixed costs by the contribution margin per unit. The contribution margin per unit is the difference between the selling price per unit and the variable cost per unit. Revenue per Unit is the amount of money that a company earns per unit sold. This may simply be the price of the unit. Variable costs, on the other hand, fluctuate with the level of production or sales, including materials, labor, and direct production costs.