What is the meaning of breakeven?

noun breakeven 1 the level of commercial activity at which the total cost and total revenue of a business enterprise are equal 2 (as modifier) breakeven prices More ...

Why do businesses use break-even?

Using break-even allows a business to understand its costs, revenue and potential profit to help inform business decisions. Break-even can be calculated using the contribution method. This involves working out the contribution that each product sold provides towards the fixed costs of a business.

What is a break-even point in finance?

Break-even (or break even ), often abbreviated as B/E in finance, (sometimes called point of equilibrium) is the point of balance making neither a profit nor a loss. Any number below the break-even point constitutes a loss while any number above it shows a profit. The term originates in finance but the concept has been applied in other fields.

What is a breakeven analysis?

A breakeven analysis will show you how to properly price your products from a business standpoint. Assume an investor buys Microsoft stock ( MSFT) at $110. That is now their breakeven point on the trade. If the price moves above $110, the investor is making money. If the stock drops below $110, they are losing money.