Break-even point

Break-even point in economics is the point at which cost or expenses and income are equal - there is no net loss or gain, one has "broken even". It is the point at which a firm or other economic entity is equal to its fixed costs divided by its contribution to profit per unit of output, which can be shown by the following formula:

  • Break-even point = (Fixed costs) / (Contribution per unit output)
    • Contribution = Price per Unit - Variable Costs per Unit

The break even point is also the point on a chart indicating the time when something has broken even, and is a general term for not having gained or lost something in a process.

See Also


Link to this page: "http://www.smallbusiness.com/wiki/Break-even_point"


 
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