Business & Finance Homework Help| Business & Finance homework help
This is the price where total sales revenue equals all costs and expenses of producing a product or service. This price range does not allow for any profits or losses, as the revenues are equal to costs. Prices above or below this range will lead to a company making a profit, and prices below that level would result in losses.
The maximum profit occurs when a company’s selling price is higher than the sum of all production costs plus a reasonable rate of return on investment. The selling price must reach this (or a higher level) in order to fully recover all the costs and investments associated with producing goods/services. All additional funds received will be pure profit for the business. However, it should be noted that as prices increase further beyond what could be considered “fair market value”; then demand may start to decrease due to customers seeking out cheaper alternatives elsewhere thus leading to lower profitability levels in long run.
In conclusion, understanding both concepts – break-even and maximum profit points – are important components of good pricing strategies; since they help ensure companies make money while also maintaining competitive pricing structures their respective markets