Break-even pricing is primarily used to determine what?

Break-even pricing is focused on identifying the minimum price at which a product or service must be sold to cover its total costs, which includes both fixed and variable costs. This calculation helps businesses understand the sales volume required to avoid losses. When the total revenue equals total costs, the business breaks even, meaning it has not made a profit but has also not incurred a loss.

This approach is crucial for companies as it aids in setting pricing strategies, helps in financial planning, and serves as a tool for evaluating whether a launch of a new product or service is viable. Thus, by determining the minimum required price, businesses can ensure that they set a solid foundation before considering other pricing strategies aimed at profit maximization or market competitiveness.