Break-even point
The break-even point is the revenue level at which a business covers all its fixed and variable costs. Above it, every additional euro generates profit; below it, the business runs at a loss.
In practice
A franchisee opens a location with €30k in monthly fixed costs and a 40% gross margin. The break-even point falls at €75k of monthly revenue. If the unit achieves €90k, it generates €6k in profit. Knowing this threshold precisely is critical during a seasonally slow month: it determines whether cash reserves should be deployed or emergency cost cuts are necessary.