Break-Even Pricing Law and Legal Definition

Break-even pricing refers to the method of determining the price of a product at the short-run average unit cost, including both fixed and variable costs. It helps to price products or services on the basis of the generated revenue that covers the cost of manufacturing and selling the product or service. Break-even pricing is generally used as a fast-growing marketing tool for market expansion or penetration. Understanding of the break-even price points helps a business management to work toward generating profits and to determine whether they should enter a particular market.