Break-Even

Find how many units you must sell to cover your fixed costs, given the price and variable cost per unit. Essential for pricing a product or launching a small business.

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Worked example

Units: 200 · Revenue: $8,000.00

How it’s solved

Worked on the example above, step by step — follow along and you can do it on paper next time, no tool required.

Break-even is the sales volume where revenue exactly covers fixed costs; each unit's margin chips away at them.
Contribution margin per unit = price − cost
$40.00 − $15.00 = $25.00
Units = fixed costs ÷ margin per unit
$5,000.00 ÷ $25.00 = 200
Revenue at break-even = units × price
200 × $40.00 = $8,000.00

Learn the method

Inputs

Fixed $
5000
Price/unit $
40
Cost/unit $
15

Frequently asked

What's the break-even formula?

Units = fixed costs ÷ (price per unit − cost per unit). The denominator is your contribution margin.

What if price equals cost?

There's no margin to cover fixed costs, so the break-even point is infinite — raise the price or cut the cost.