HOMEPAGE

Break‑Even Point

Definition

The Break‑Even Point is the level of sales where total revenue equals total costs — no profit, no loss.

$$\text{Break‑Even Units}=\frac{\text{Fixed Costs}}{\text{Contribution Margin per Unit}}$$

Why It Matters

• Shows the minimum sales needed to avoid losses.
• Helps evaluate business models, pricing, and cost structure.
• Critical for startups, budgeting, and scenario planning.

Example

Fixed Costs = $500,000 Contribution Margin per unit = $50

$$\text{Break‑Even Units}=\frac{\mathrm{500,000}}{50}=\mathrm{10,000}$$

The company must sell 10,000 units to break even.