Find your break-even point
Fixed costs, price per unit, and variable cost per unit produce the unit count and revenue where profit turns positive — plus a margin of safety.
Tools used in this guide
The job
Before a product ships, someone asks "how many do we have to sell?" Break-even analysis answers it: fixed costs divided by the contribution margin per unit gives the volume where the operation stops losing money.
Enter the three numbers
Fixed costs per period, selling price per unit, and variable cost per unit. The result is break-even units, break-even revenue, and the contribution margin ratio. Add an optional target profit to see the units needed to reach it.
- Contribution margin is price minus variable cost — it must be positive or no volume breaks even.
- Margin of safety is how far expected sales sit above the break-even point.
Worked example
$12,000 fixed, $50 price, $30 variable cost: margin is $20 per unit, so break-even is 600 units or $30,000 revenue. A $4,000 target profit needs 800 units.
Where it stops
A single-product linear model — no volume discounts, stepped fixed costs, or multi-product mixes. Values are capped at 1e12; price must exceed variable cost. Semi-variable costs belong split into fixed and variable parts first.