Why should businesses care about their break-even point? Knowing your BEP is like having a financial compass. It offers insights into:
- The number of products or services needed to be sold to cover costs
- How changes in pricing can affect profitability
- When new products or services start generating profit
Moreover, the break-even point is also a useful tool for securing funding. Investors and lenders often want to know when they can expect a return on their investment. By presenting a realistic break-even point, businesses can demonstrate their potential for profitability.