Definition: Break-even pricing is an accounting pricing methodology in which the price point at which a product will earn zero profit is calculated. In other words, it is the point at which cost is equal to revenue.
In manufacturing, the break-even price is the price at which the cost to manufacture a product is equal to its sale price. Break-even pricing is often used as a competitive strategy to gain market share, but a break-even price strategy can lead to the perception that a product is of low quality.
This is the point at which you neither make nor lose money in producing a product or delivering a service. For example, you would be at the break-even point if it cost you $100 to produce a product that you sell for $100. A break-even analysis is the process you use to uncover those break-even numbers.
Break price. Used in the context of general equities. Change one's offering or bid prices to move to a more realistic, tight level where execution is more feasible. Often done to trim one's position, thus "breaking price" from where the trades occurred (if long, "break price" downward by a certain amount).
Break-even pricing, also often referred to as target-return pricing, is another version of cost-based pricing strategy. When businesses use a break-even pricing strategy, they determine their selling price by working out the product manufacturing cost, to discover the break even selling point.
Definition: Break-even pricing is an accounting pricing methodology in which the price point at which a product will earn zero profit is calculated. In other words, it is the point at which cost is equal to revenue.
To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin.
break·even ˈbrāk-ˈē-vən. : the point at which cost and income are equal and there is neither profit nor loss. also : a financial result reflecting neither profit nor loss.
a pricing method in which a formula is used to calculate the price to be set for a product to return a desired profit or rate of return on investment assuming that a particular quantity of the product is sold.
Definition and Citations:
The total cost incurred for a good or services that is broken down into its separate elements such as labor, shipping, etc. The situation in which an estimate is required to determine the cost is called price unbundling.
Calculate Selling Price Per Unit
Identify the total cost of all units being bought. Divide the total cost by the number of units bought to obtain the cost price. Use the selling price formula to find out the final price i.e.: SP = CP + Profit Margin.
What is break-even in options? The break-even price for an option is the stock price at which exercising the option becomes a profitable trade instead of a losing trade. The break-even price differs from the strike price by an amount equal to the premium and commissions paid.
The base price is the minimum break-even-price covering all costs. Mathematically, the formula for determining the break-even price is the aggregate monetary receipts or sale value minus the costs of investment or production. The break-even-price is at the point where the sale value or receipts match the total costs.
If the stock price goes up, and trades above the strike price before the expiration date, you can sell the call option and make a profit. Even if the stock doesn't rise above $2,950, the call options can still increase in value substantially if there's a swift bullish move with plenty of time left until expiration.
Predatory pricing is the illegal business practice of setting prices for a product unrealistically low in order to eliminate the competition. Predatory pricing violates antitrust laws, as its goal is to create a monopoly. However, the practice can be difficult to prosecute.
ROI is a calculation of the monetary value of an investment versus its cost. The ROI formula is: (profit minus cost) / cost. If you made $10,000 from a $1,000 effort, your return on investment (ROI) would be 0.9, or 90%.
a pricing method in which an estimation is made of the price that customers are willing to pay for a given product; this price is then compared to the per unit cost to see if it meets the firm's profit objectives.
The break-even price is the price at which a product generates no profit or loss. In other words, it is the point at which income equals expenses.
A breakeven point tells you what price level, yield, profit, or other metric must be achieved not to lose any money—or to make back an initial investment on a trade or project. Thus, if a project costs $1 million to undertake, it would need to generate $1 million in net profits before it breaks even.
The break-even point is the point at which total cost and total revenue are equal, meaning there is no loss or gain for your small business.
To calculate the break-even point on an investment, add all the costs associated with the investment and subtract that from any income received. So if the total costs of an investment were $1,000 and there was $100 of offsetting income, the BEP would be $900.
The break-even point is the level at which total costs are equal to total revenue. It can help businesses understand how much of a product or service they can sell to produce a profit. Break-even points can also help establish goals for sales teams and drive productivity .
What is a target pricing strategy? The target pricing method determines pricing based on a target profit margin. It is based on the costs of producing and delivering your product or service and what customers will pay for it. You first decide how much profit you need to make then set the price based on that.