Find out how many units you need to sell to break even
Finds the sales volume at which total revenue exactly covers total cost, so profit is zero. Every unit sold beyond that point contributes its full contribution margin straight to profit.
Break-even units = Fixed costs / (Price − Variable cost per unit) Break-even revenue = Fixed costs / Contribution margin ratio
Fixed costscosts that do not change with volume (rent, salaries, software)Priceselling price per unitVariable costcost incurred per additional unit soldCM ratio(Price − Variable cost) / PriceThe break-even point is where total revenue equals total costs (fixed + variable). At this point, a business neither makes a profit nor incurs a loss.
Break-even units = Fixed Costs / (Selling Price per Unit minus Variable Cost per Unit). This tells you how many units you must sell to cover all costs.
It helps businesses determine minimum sales targets, evaluate pricing strategies, assess the impact of cost changes, and make informed decisions about launching new products.