The break-even point is where you have made exactly enough to cover everything you spent — no profit, no loss. Below it you are subsidizing the business; above it, each additional sale finally contributes to profit. Knowing it turns "am I doing okay?" into a concrete number of units or dollars.
The math leans on the margin and overhead concepts: divide your fixed overhead by the gross profit per unit and you get the number of units you must sell to break even. For example, a maker with $1,200 of monthly overhead and $6 of gross profit per item needs to sell 200 items a month before profit begins.
Break-even is also a pricing and planning tool. If the units needed to break even look unrealistic, the problem is upstream — the price is too low, the cost is too high, or the overhead is too heavy — and the fix belongs there rather than in selling ever-harder.
Related terms
Overhead
The ongoing costs of running your business that are not tied to any single product — rent, utilities, software, insurance, and similar fixed expenses.
Gross Margin
Gross profit expressed as a percentage of the selling price — what fraction of each dollar of revenue is left after the direct cost of the goods sold.
Net Profit
What remains after all costs — direct costs of goods sold plus overhead, fees, and taxes — are subtracted from revenue. The true bottom line.