What is a Break-Even Point?
The concept of a break-even point is common to both general business applications and in the trading process of securities and options. In both scenarios, the break-even point has to do with an equalizing of profits and expenses, with no real accounting for the apparent gain that takes place. With business applications, the break-even point is focused on the generation of profit from the business endeavor. Essentially, the amount of revenue generated by the effort of producing, marketing, and selling a good or service is sufficient to cover all expenses. All expenses that are both directly and indirectly related to the business of the company will be included. This will involve the cost for raw materials, labor, equipment, facilities, storage, packaging, and transportation, along with any peripheral expenses. In the final analysis, the break-even point is the number of units that must be sold in order to completely recover the total cost of producing and marketing the goods. Ideally, t
