The break-even point refers to the point at which a company’s revenue exactly matches its costs. Consequently, there is neither a profit nor a loss. From this point onwards, a company begins to operate at a profit.
The break-even point is a key indicator in financial planning and helps to assess the economic viability of a business model.
It is influenced by:
- Fixed costs (e.g. rent, salaries)
- Variable costs (e.g. production costs per unit)
- Selling price per product or service
- Sales volume
Analysing the break-even point helps companies to:
- to determine the sales volume required to cover costs
- Planning pricing strategies in a targeted manner
- Optimising cost structures
- to assess financial risks more effectively
- to make well-informed investment decisions
The break-even point is a particularly important milestone for start-ups, as it indicates when a business model becomes self-sustaining. innoWerft supports founders in assessing the economic viability of their business models, developing financial plans and devising strategies to achieve sustainable profitability more quickly.