an evaluation of the relationship between costs and revenues; helps determine whether the firm can cover all its costs with a particular price. Allows the marketer to calculate the effects of several different prices. See break-even point (BEP). break-even point (BEP) the precise quantity at which total costs equal total revenues, telling the marketer exactly how many units must be sold at a particular price to just cover costs; in units, the point is calculated by dividing total fixed cost by fixed cost contribution per unit (selling price per unit minus variable cost per unit). See break-even analysis.
The process of calculating that quantity of output for which total revenue equals total expenses. After that break-even point, the earnings of the company will be boosted by the incremental contribution margin from the additional output.
Process of determining how many units of production must be sold, or how much revenue must be obtained, before a business begins to earn a profit.