The moment of realization comes when the barber accidentally cuts the man's ear and blood starts to flow. At that instant, the barber recognizes the smell of the blood and realizes that it is the same smell that he has noticed in the past when he has shaved dead men. This revelation fills him with horror, and he comes to the shocking realization that the man in his chair is, in fact, a corpse.
The climax of the story is reached as the barber experiences intense fear and confusion. He is faced with the ethical dilemma of whether to complete the task he has been assigned or to alert the authorities and expose the sinister plot. The gravity of the situation and the weight of the decision create a dramatic turning point in the narrative.