At its simplest, a break-even point (or BEP) is the point at which your business’s expenses equal its revenue. In other words, if you’re breaking even, you aren’t spending more than you’re making—which also means you aren’t making more than you’re spending. At your break-even point, your business isn’t profitable, but it also isn’t losing money: it’s at an exact net neutral.
Like a lot of supposedly simple accounting principles, the break-even point is a little harder to understand than it initially appears. Let’s dive into how to calculate your break-even point and how it can guide your business.