Your break-even point is the sales volume where revenue equals total costs. Beyond it, you earn profit; below it, you lose money.
The formula
Break-even units equal fixed costs divided by contribution margin per unit, which is price minus variable cost. With $12,000 monthly fixed costs, a $45 price and $18 variable cost, contribution margin is $27, so break-even is about 445 units.
Ways to lower it
Raise prices, reduce variable costs through better sourcing or efficiency, cut fixed overhead or shift mix toward higher-margin products. Even small improvements can lower the units needed significantly.
Using it for decisions
Run break-even before launching a product, hiring or signing a lease. Compare the break-even volume with realistic demand, and keep a safety margin since forecasts are usually optimistic.
Try the numbers
Use our Break-Even Calculator to see this in practice. With its default example (Fixed costs per month: $12,000; Price per unit: $45.00; Variable cost per unit: $18.00), it shows break-even units: 445. Adjust the inputs to match your situation.
Key takeaways
- Break-even units = fixed costs ÷ contribution margin.
- Lower it by raising price or cutting costs.
- Use it before major commitments.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.