Breakeven

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The breakeven point in economics is the point at which cost or expenses and income are equal - there is no net loss or gain, one has "broken even".

The point at which a firm or other economic entity breaks even is equal to its fixed costs divided by its contribution to profit per unit of output, which can be shown by the following formula: -

Breakeven Point = Fixed CostsoverContribution per Unit Output

The break even point is also the point on a chart indicating the time when something has broken even, and is a general term for not having gained or lost something in a process.

The Contribution per Unit can be worked out using

Contribution = Price per Unit - Variable Costs per Unit

Other uses of the term

In nuclear fusion research, the term breakeven refers to a fusion energy gain factor equal to unity.

The notion can also be found in more general phenomena, such as percolation, and is rather similar to the critical threshold. In energy, the breakeven point is the point where usable energy gotten from a process exceeds the input energy.

In computer science, the term refers to a point in the life cycle of a programming language where the language is capable of developing its own compiler or interpreter. This usually marks a transition from a "toy" language to a language usable in the real world.

In medicine, it is a postulated state when the advances of medicine permit every year an increase of one year or more of the life expectancy of the livings, therefore leading to a sort of immortality (barring sudden death).

See also

• Break even analysis
• Margin of safety