Definition
In investing, the breakeven point is the point at which the original cost of an asset equals the market price.
Understanding the Term
In simple terms, Break-Even Point (BEP) refers to the first acquisition cost that was paid by a trader or an investor.
The BEP is determined by comparing the market price of an asset to the original cost (including trading fees); the breakeven point is reached when the two prices are equal.
At this point, there is no profit or loss, and any residual expenses have been paid.
Assuming an investor buys assets at $110, that price automatically becomes their break-even point on the trade. Should the price stay right at $110, then it shall be that they are at the BEP because they are not making or losing anything.
However, if the price moves above $110, the investor is making a profit. And if the value price drops below $110, then they are losing money.
Takeaway
A company starts to make profits after it manages to break above the BEP.