How to Find Your Break-Even Point

Break-even units = fixed costs ÷ (price − variable cost per unit). The denominator — price minus variable cost — is the contribution margin: what each sale contributes toward covering fixed costs.

Example: $10,000 of monthly fixed costs, a $50 price and $20 of variable cost per unit gives a $30 contribution margin, so break-even is 334 units per month (always round up).

Below break-even you lose money on every month that continues; above it, each additional unit earns the full contribution margin as profit. The break-even point is where total revenue exactly equals total cost.

Express it in revenue too — 334 × $50 = $16,700 — because revenue targets are often easier to track than unit counts.

Break-even analysis stress-tests ideas before you commit: if break-even requires capturing 20% of a small local market, the plan is fragile. If it needs 50 units and you can realistically sell 500, the cushion is large.

Small price changes move break-even sharply. Raising the example price from $50 to $55 cuts break-even from 334 to 286 units — pricing is the most powerful lever most businesses have.