The Break-even point is when the revenue incurred is equal to the cost spent, resulting in zero profits. It is also defined as the level of production at which the net revenue equals the net expenses. This is a situation where the company sees neither a loss nor a profit.

The formula of Break-even Point:

Break even analysis formula

Break-even analysis calculates the number of sales required to equate the fixed and variable expenses to production. Break-even analysis is used while starting a new business, creating a new product, and changing to a new business model.