How to use it
- Use the formula below with your own figures.
The formula
Break-even units = fixed costs ÷ (price − variable cost).
Worked example
Fixed costs of $10,000 with $20 margin per unit break even at 500 units.
Frequently asked questions
Why know it?
It sets your minimum viable sales.
What lowers it?
Higher margins or lower fixed costs.
Tips
- Know your break-even before scaling spend.
- Separate margin from markup when pricing.
- Discount future cash flows to value projects.
Key terms
- Break-even
- Where revenue covers costs.
- Margin
- Profit as a percent of price.
- NPV
- Discounted value of future cash flows.