How this differs from break-even units
Break-even units asks how many units you need at a given price. Break-even price asks what price you need at a given volume.
Example
If fixed costs are 10,000, expected units are 500 and variable cost is 20, allocated fixed cost is 20 per unit. With a 20% target margin, price is (20 + 20) / 0.80 = 50.
Common mistakes
Do not treat expected volume as guaranteed. If unit sales fall, allocated fixed cost per unit rises and the needed price may be higher.
Limitations
If expected volume changes, allocated fixed cost per unit changes. Use scenario comparisons before setting real prices.
Last reviewed: 2026-05-17