Break-Even analysis is an analysis used to determine the instance at which a business’ revenue equals the costs associated with producing or receiving the revenue.
This type of analysis also indicates a margin of safety, which is an amount that a business’ revenues exceed the break-even point. This margin of safety is an indicator for which revenues can fall while keeping the company above the break-even point.
It should be noted that an analysis of this type is supply-side oriented. This means it only analyzes the costs of the sales without regard for how demand is affected at different pricing structures and levels.