The break-even point refers to the revenue required to cover the total amount of fixed and variable expenses of a business over a specified period of time. Revenues could be expressed in dollars (or other currencies), in units, hours of services rendered, etc.
The calculation and management of the break-even point is somewhat complex because most companies manage a "mix" of products with different margins, making the formula of the unit contribution margin almost inoperative. But, globally and by means of the company's big numbers, we can calculate the break-even point with the following equation:
Break-Even point = Fixed Costs ÷ Sales price per unit – Variable costs per unit
The Sales Glossary is a compendium of all the most commonly used terminology in sales strategy. Many of the concepts listed here are used when implementing a CRM system or a digital sales funnel, no matter if they are legacy systems or an online CRM. See also our blog that deals with sales techniques, marketing and sales culture.