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Break-Even Point

The sales level at which total revenue exactly covers total cost.

Area
Accounting
In this area
51 terms of 257

The break-even point is where contribution from sales equals fixed costs, so profit is zero. Below it you are losing money; above it, each additional sale contributes to profit.

It reframes pricing and cost decisions usefully: a small price cut can require a surprisingly large volume increase just to stand still.

How it is calculated

Break-even units = Fixed costs ÷ Contribution per unit

Contribution per unit is selling price minus variable cost per unit.

Related terms

Contribution Margin

Revenue minus variable costs — what each sale contributes to fixed costs and profit.

Gross Margin

The percentage of revenue left after the cost of goods sold.

Income Statement

A summary of revenue, costs and profit over a period.

More in Accounting

Accounts Payable (AP) Accounts Receivable (AR) Accrual Accounting Accrued Expense Aging Report Bad Debt Provision Balance Sheet Bank Reconciliation

Break-Even Point is not just a definition here

Accounting runs on this vocabulary every day in AWRA OpsHub — 51 of our 257 glossary terms describe things the platform actually does.

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