📖 Overview
Use this tool to find the exact sales volume needed to break even given fixed costs and margin per unit.
⚙️ How It Works
Calculates the minimum number of units to sell so that total revenue equals total costs (fixed + variable).
The Formula
Break-Even Units = Fixed Costs ÷ (Price per Unit − Variable Cost per Unit)
| Fixed Costs | Costs that do not change with volume (rent, salaries, equipment) |
| Price/Unit | Revenue received per unit sold |
| Variable/Unit | Costs that scale with each unit produced (materials, direct labor) |
| Contribution | Price − Variable Cost = profit contributed by each unit toward fixed costs |
💡Every unit sold above break-even contributes directly to profit. The wider the gap between price and variable cost (contribution margin), the fewer units you need to break even.
Practical Tips
💡 Reduce fixed costs or raise prices to lower break-even point.
💡 Perform sensitivity analysis: what if variable cost rises 10%?
Frequently Asked Questions
❓ What if contribution margin is zero or negative?
You cannot break even — every unit sold increases loss. Raise price or reduce variable cost.
❓ Should I include owner salary in fixed costs?
Yes, if you require that compensation to operate the business sustainably.