courtesy Recently, I was just going through some documents. I saw something which caught my eyes. It was a word I never heard before (or maybe heard and forgot). Quickly a question came up. What is this break-even point? I spoke to one of about the same. From here onwards comes his words: our partner guy Let’s take a example: transaction You bought goods for $90 — purchase You sold goods for $100 — sale You also paid $5 — miscellaneous cost such as tax, transport etc Here, investment is $90 + $5 = $95 Profit per transaction is $5 Break even point is where you have recovered your investments and made zero profit. After this point your actual revenue starts. Now, how many iterations (let’s say ) one need to perform in order to recover that initial of $95 with $5 profit each time? X investment Here, it’s simple 19 iterations. ($5 multiply by = $95) X In this example, after 19 succesful iterations, one will reach to break-even point. It’s important to understand these things along with knowing how to cook an omelette. Originally published at xameeramir.github.io .
