Definition:
The point in business where the sales equal the expenses. There is no profit and no loss.
Formula:
Break-Even Point ($) = Fixed Costs ÷ Gross Margin Percentage
Also Known As: Breakeven Analysis
Examples:
Our retail store buys widgets for $15 each, marks them up and sells them for $30. Our monthly expenses (fixed costs) are $10,000. This means our breakeven point would be $20,000 or 667 units.
$10,000 ÷ (15/30) = $20,000
$20,000 ÷ $30 = 667