A break-even chart plots cost and revenue lines against sales volume, showing visually where they cross — the point where a business stops losing money and starts making it.
What each line represents
- Fixed cost line: flat, since it doesn’t change with volume
- Total cost line: fixed cost plus variable cost, rising as volume increases
- Revenue line: starts at zero, rising steeper than the cost line if the business is viable
Reading the crossing point
Where the revenue line crosses the total cost line is your break-even point — the sales volume needed to cover all costs. Below that point on the chart, the gap between the lines shows your loss; above it, the gap shows your profit.
Why the visual helps beyond the number
A single break-even number tells you the target; the chart shows you how sensitive that target is to cost or price changes — a steep revenue line reaching break-even quickly looks very different from a shallow one, even if the break-even number itself is similar.