Break Even

Break-even (or break even) is the point of balance making neither a profit nor a loss. The term originates in finance, but the concept has been applied widely since.

In economics and business, specifically cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even." A profit or a loss has not been made, although opportunity costs have been "paid," and capital has received the risk-adjusted, expected return. In some other words, it´s the point in which the total revenue of your business exceed your total costs, it´s the point where your business begins to create richness instead of consum it. It is shown graphically as the point where the total revenue and total cost curves meet. In the linear case the break-even point is equal to the fixed costs divided by the contribution margin per unit.

The break-even point is achieved when the generated profits match the total costs accumulated till the date of profit generation. Establishing the break-even point helps businesses in setting plans for the levels of production which it needs to maintain be profitable.

The accounting method of calculating break-even point does not include cost of working capital. The financial method of calculating break-even, called value added break-even analysis, is used to assess the feasibility of a project. This method not only accounts for all costs, it also includes the opportunity costs of the capital required to develop a project.

In nuclear fusion research, the term "break-even" refers to a fusion energy gain factor equal to unity; this is also known as the Lawson criterion. The notion can also be found in more general phenomena, such as percolation, and is rather similar to the critical threshold. In energy, the break-even point is the point where usable energy gotten from a process equals the input energy.

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