Breakeven Analysis

Breakeven point is the level of sales required to cover all costs.

Sales above this break-even point will start to generate profits. The level of sales required depends on both the price of the product or service and the level of output. In working out the break-even point you should predict the volume of sales you must achieve for the business to succeed at the price you have set, and then predict how this volume would have to change if the price fluctuated.