Break-even point is the point at which the total cost and total revenue of a business are equal: there is no net loss or gain. It is the minimum number of sales the business needs to make to ensure there’s no profit and no loss.
It is one of the most important factors to determine success of any business as it helps in understanding losses, reworking on customer niche, and knowing how to boost profits. Break-even point is dependent on three factors:
Fixed costs are those that are constant. Rents, salaries, fees, depreciation, etc. are some of the fixed costs a business has to incur. Variable costs depend mostly on the number of sales – and tend to vary on the basis of quantity sold. Sale price is the effective selling price of the product the business deals in.