Break-even point: how much can you lose before going into the red
If revenue fell by 15%, would you still be above break-even or below it? Knowing before the drop arrives turns a gut reaction into an informed decision — and it is one of the first pages our clients look at in the Arithmos report.
A simple question for anyone running a small business.
If your revenue fell 15% from today — a weaker season, an important customer leaving, a slowdown longer than expected — would you still be above break-even? Or below?
What break-even is
The break-even point is the level of revenue at which income covers costs exactly, with no profit and no loss. Below that threshold, every euro less of revenue becomes a real loss; above it, it becomes a safety margin.
Why it matters to know before, not after
Knowing this number before the drop arrives, not after, is what turns a gut reaction into an informed decision. Those who already know how much margin they have can decide calmly what to cut, where to step in, when to wait. Those who find out after the drop has happened usually react in a panic.
In the Arithmos Analytics report the break-even point is one of the pages our clients look at first: it shows exactly how much safety margin they have today compared with the level at which the business would make a loss.
If you have never calculated it for your business, it is a good place to start.