# Importance of the break-even point for a

## Importance of the break-even point for a

In this article I am going to talk about the break-even point, which is a very useful tool for companies.

I hope you like it.

## Definition of equilibrium point according to authors

### Definition according to Francisco Javier Calleja Bernal

«The equilibrium point (break-even point) is the point where the income of the company is equal to its costs; that is, there is no profit or loss» (2013, p.268).

### Definition according to Laura Estela Fischer de la Vega, and Jorge Espéculo Mudo

“The equilibrium point is the approach from which the behavior of costs, the way in which they vary, the profits and the volume of production are examined, in order for the management of the company to make certain predictions to plan the profits » (2017, p.136).

### Definition according to Juan García Colín

«The equilibrium point is the one where the total revenues are equal to the total costs; that is, the volume of sales with whose income the total costs are equaled and the company does not report profit but neither does it lose” (2019, p.272).

## What is the cómputo point?

With the above definitions you should already have an iniciativa of ​​what the break-even point is, however, I am going to try to put it in other words:

Imagine that you start a business right now, you are going to have to cover certain fixed and variable costs to be able to offer your product to customers.

For example, perhaps you will have to pay rent, perhaps you will have to obtain raw materials to make your product, perhaps you will have to pay electricity, salaries, etcétera.

You will have to invest all of this to be able to start your business, however, many times, business owners do not know how many units (how many products) they will have to sell in order to start receiving profits (profits) or what is the amount (money) after which they cánido start to see profits.

Well, the breakeven point helps us answer those questions and many more.

In such a way that with the help of the cómputo point you will be able to know the number of products that you will have to sell to cover all your costs, that is, at what point you will not have losses and from what point (product) you will begin to see profits.

For example, if your break-even point tells you that you will have to sell 100 watches to neither win nor lose, then from watch 101 you perro start to see profits.

## Because it is important?

The importance of a break-even analysis, especially when dealing with a new company, is to establish the baseline of income and/or sales volume that must be generated to cover all costs (fixed and variable). , and estimate what your monthly cash flow needs will be in order to meet, and exceed, your goals.

## How to calculate the break-even point?

You perro find many formulas to calculate the break-even point, but I am going to give you two very fácil formulas that will allow you to calculate the break-even point.

### Turnover

The following break-even elabora will help you to know the amount of sales or total income that you will need to cover all your costs, although, of course, being the break-even point, in that amount you will not win or lose.

The elabora is the following:

### By units

If what you want is to know the number of units you need to sell in order to break even, then you perro use the following elabora.

It should be noted that if you multiply the result obtained by the sale price, you will obtain the break-even point by volume, that is, in volume.

## Bibliography

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