• The break-even price describes the change in value that only corresponds to covering the initial investment or cost.

  • For an option contract, the break-even price is the level of the underlying security at which it covers the option premium.
  • In the manufacturing industry, the break-even price is the price at which the cost of producing a product equals its selling price.
  • Break-even pricing is often used as a competitive strategy to gain market share, but break-even pricing can lead to a product being perceived as a low quality product.