What break-even means
Break-even is the point where total revenue covers total cost. Above that point, each additional unit contributes the unit contribution margin toward profit.
Example
With $10,000 fixed cost, $50 price and $30 variable cost, contribution is $20 per unit. Break-even volume is 10,000 / 20 = 500 units.
What to check in the result
Look at contribution per unit, contribution margin percentage and required revenue, not just the unit count. If the break-even revenue is unrealistic for your market, the issue may be price, variable cost, fixed cost or expected sales volume.
References
- U.S. Small Business Administration: Break-even point - formula and planning context, accessed 2026-05-17.
Last reviewed: 2026-05-17