Finance · business glossary
What is Break-even point?
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
definition
The sales level at which total revenue exactly equals total costs, with no profit and no loss.
Break-even point explained
The break-even point is the level of sales at which total revenue exactly covers total costs, so there is neither profit nor loss.
formula
Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit)
example
Fixed costs ₹90,000, price ₹300, variable cost ₹120 → each unit contributes ₹180, so break-even is 500 units.
why it matters
It tells you the minimum sales needed to survive and how price and cost changes affect that floor.
common mistake
Forgetting to update break-even when rent, salaries or input costs rise.
Frequently asked questions
What is Break-even point?
The sales level at which total revenue exactly equals total costs, with no profit and no loss. The break-even point is the level of sales at which total revenue exactly covers total costs, so there is neither profit nor loss.
How do you calculate Break-even point?
Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit). Fixed costs ₹90,000, price ₹300, variable cost ₹120 → each unit contributes ₹180, so break-even is 500 units.
Why does Break-even point matter?
It tells you the minimum sales needed to survive and how price and cost changes affect that floor.
What is a common mistake with Break-even point?
Forgetting to update break-even when rent, salaries or input costs rise.
Related terms
Fixed costs
Costs that stay roughly the same regardless of how much you sell, like rent or salaried staff.
Variable costs
Costs that rise and fall directly with how much you produce or sell, like raw materials or packaging.
Gross margin
The percentage of revenue left after subtracting the direct cost of making or delivering what you sold, before any overhead is deducted.