DEFINITION of 'BreakEven Analysis'
An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Breakeven analysis calculates what is known as a margin of safety, the amount that revenues exceed the breakeven point. This is the amount that revenues can fall while still staying above the breakeven point.
INVESTOPEDIA EXPLAINS 'BreakEven Analysis'
Breakeven analysis is a supplyside analysis; that is, it only analyzes the costs of the sales. It does not analyze how demand may be affected at different price levels.
For example, if it costs $50 to produce a widget, and there are fixed costs of $1,000, the breakeven point for selling the widgets would be:
If selling for $100: 20 Widgets (Calculated as 1000/(10050)=20)
If selling for $200: 7 Widgets (Calculated as 1000/(20050)=6.7)
In this example, if someone sells the product for a higher price, the breakeven point will come faster. What the analysis does not show is that it may be easier to sell 20 widgets at $100 each than 7 widgets at $200 each. A demandside analysis would give the seller that information.
VIDEO

ZeroOne Integer Programming
An analytical method consisting of what amounts to a series of ... 
Breakeven Price
1. The amount of money for which an asset must be sold to cover ... 
Incremental Analysis
A decisionmaking technique used in business to determine the ... 
Fixed Cost
A cost that does not change with an increase or decrease in the ... 
Unit Cost
The cost incurred by a company to produce, store and sell one ... 
Profit Range
A range of prices that an underlying security can possess in ...

What does breakeven analysis tell a business about its shutdown point?
Breakeven analysis tells a company how many months it has left to operate based on the amount of expected cash flow and ... Read Full Answer >> 
How is breakeven analysis affected by economies of scale?
Breakeven analysis is used to determine when revenue of a good sold equals the cost of the good sold. The breakeven point ... Read Full Answer >> 
How can I calculate breakeven analysis in Excel?
Breakeven analysis is used to determine when revenue of a good sold equals the cost of the good sold. It is the point at ... Read Full Answer >> 
What's the difference between the production cost and the manufacturing cost?
Production costs include any expenses associated with business activity for an organization. Manufacturing costs only include ... Read Full Answer >> 
Why does the efficient market hypothesis state that technical analysis is bunk?
The efficient market hypothesis (EMH) suggests that markets are informationally efficient. This means that historical prices ... Read Full Answer >> 
How do you use a financial calculator to determine present value?
Determining the present value of a given cash flow is based on the concept that money today is inherently worth more than ... Read Full Answer >>

Investing
What's a BreakEven Analysis?
Most businesses have fixed costs such as rent and salaries, as well as costs for raw materials. Breakeven analysis shows how many sales it takes to pay off the costs of doing business, and “break ... 
Budgeting
Will You Break Even On Your Home?
Calculate how much your property will need to appreciate to cover the costs of owning it. 
Fundamental Analysis
Measuring Company Efficiency
Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period. 
Markets
Consumer Spending As A Market Indicator
What people buy and where they shop can provide valuable information about the economy. 
Fundamental Analysis
Analyzing Retail Stocks
To analyze retail stocks, investors need to be aware of the most common metrics used. Find out what they are. 
Professionals
Do You Belong In Retail?
Making a career in retail is one of the most challenging tasks in the investment industry. Find out if it's for you. 
Economics
What Is Supply?
Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics. 
Economics
Modified Internal Rate of Return (MIRR)
Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation. 
Economics
Understanding the Fisher Effect
The Fisher effect states that the real interest rate equals the nominal interest rate minus the expected inflation rate. 
Fundamental Analysis
Explaining the Geometric Mean
The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.