Break-Even Point.

In plain English

The break-even point is the moment a business stops losing money and is about to start making it. It is the number of units you must sell, or the dollar amount of sales you must hit, for total revenue to equal total costs. To find it you separate fixed costs (expenses that stay the same no matter how much you sell, like rent) from variable costs (expenses that rise with each sale, like materials). Below the break-even point you lose money; above it, each extra sale starts adding profit.

01Why it matters

Knowing your break-even point tells you exactly how many sales you need just to keep the lights on, which turns a vague worry into a clear target. It is also how you test whether a price change or a new expense is survivable.

02The math, step by step

Your candle shop has $1,000 a month in fixed costs (rent and software). Each candle sells for $30 and costs $12 in materials, so each one contributes $18 toward fixed costs. Divide $1,000 by $18 and you get about 56 candles. You must sell roughly 56 candles a month to break even. Candle number 57 is your first dollar of profit.

03What this is NOT

04Receipts

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