What Is Break-Even Point?
Break-even point is how much you need to sell before your business stops losing money — the point where gross profit exactly covers your fixed costs.
Direct answer
Break-even point is how much you need to sell before your business stops losing money and starts making a profit — the point where your gross profit exactly covers your fixed costs, with nothing left over yet.
A shop's fixed monthly costs (rent + a fixed staff wage) total ₵3,000. Each padlock sold brings in ₵20 of gross profit (₵100 selling price, ₵80 cost).
| Fixed Costs | ₵3,000 |
| Gross Profit per unit | ₵20 |
| Break-Even Point | 150 units |
At 150 padlocks sold in the month (₵15,000 in revenue), the shop has exactly covered its fixed costs. The 151st padlock sold is the first one that's genuinely profit.
Why this is more useful than "am I making money?"
Break-even point turns a vague worry into a specific target. Instead of wondering whether business is "good enough," a shop owner can ask a sharper question: "Am I past 150 units this month, or short of it?" That's a number you can actually track against, day by day.