The output of the standard break-even analysis. The unit sales volumes or actual sales amounts that a company needs to equal its running expense rate and not lose or make money in a given month. The formula for break-even point in units is: The formula for break-even point in sales amount is: =Regular running costs/(1-(Unit Variable Cost/Unit Price)) This should not be confused with the recovering initial investment through the regular operation of a business. That concept, often confused with break-even, is called the payback period. see break-even analysis for more background.

 

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Tim BerryTim Berry
Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.