Plan - Break Even

What is Break-Even? (B/E)
Here are 4 simple definitions of break-even:

1. The break-even point is defined as the point where sales or revenue will equal expenses and there is no profit made or loss incurred at that point.
2. It is the level of sales (by volume or selling price) at which sales will equal costs (no profit, but no loss either).
3. It is the point at which income matches expenditure.
4. It is the point at which the sales achieved are high enough to generate the gross profit necessary to cover the fixed costs of a business.

In other words, as soon as the total income coming in is sufficient to pay for the total expenses going out then break-even has been reached.

The break-even point is important for anyone who manages a business because this point is the lower limit of profit when setting prices and determining margins.

The use of break-even is important, especially where the business is starting off because you will need to check that your business is sooner or later able to cover costs and therefore not make a l...