The Break-even Analysis aims to show you at which stage the sales are going to cover the costs and expenses of the company. When the Break-even Point is reached, it means that at that precise time, the total receipts equalize the total disbursements, i.e. there are no gains or losses at that specific point. As we can see in the next image, to calculate this point you have to estimate the expected fixed costs (and also other inherent costs) of the firm and conclude how many product units must be sold in order to cover all these costs.
By knowing the cost structure value regarding the fixed costs and the units that you have to sell in order to cover these costs, you finally conclude the Break-even Point. Sometimes the Break-even Point might seem unreal for example by showing you that you will only reach it in 5 years. This might be too long so we suggest you to review some variables such as the fixed costs, variable costs and product prices in order to reduce that time and anticipate the Break-even.