2 min read
Definition
The break-even point is the volume or value of sales at which total revenue equals total costs, so the company makes neither a profit nor a loss. Above it, additional sales generate profit; below it, the company runs at a loss.
In plain terms
It's the line you have to clear just to stand still. Every sale beyond break-even is profit; every shortfall below it is a loss.
Why it matters for your company
Knowing your break-even point is essential for pricing, planning and judging whether borrowing to grow will pay. See how to read a profit and loss.
Related reading
Gross margin
Gross margin is gross profit as a percentage of revenue — the profit left after direct costs, before…
Read →Net margin
Net margin is net profit as a percentage of revenue — how many pence of every pound of sales the company…
Read →
How to read a profit & loss statement
A profit & loss statement walks from the money you earned to the money you kept, over a period of trading…
Read →Break-even point
The break-even point is the sales level where revenue exactly covers costs — below it you lose money, above…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.