Understanding Breakeven Points (BEPs)

Breakeven points (BEPs) can be applied to a wide variety of contexts. For instance, the
breakeven point in a property would be how much money the homeowner would need to
generate from a sale to exactly offset the net purchase price, inclusive of closing costs,
taxes, fees, insurance, and interest paid on the mortgage—as well as costs related to
maintenance and home improvements. At that price, the homeowner would exactly break
even, neither making nor losing any money.

Traders also apply BEPs to trades, figuring out what price a security must reach to
exactly cover all costs associated with a trade, including taxes, commissions,
management fees, and so on. A company’s breakeven point is likewise calculated by
taking fixed costs and dividing that figure by the gross profit margin percentage.