Break-even Point
The break-even point is the number of units or amount of sales at which total revenue equals total costs, so profit is zero.
Below the break-even point a business loses money; above it, each extra sale adds profit. It turns a monthly cost base into a concrete sales target.
The break-even point falls when prices rise, variable costs fall or fixed costs are cut.
Formula
Break-even units = Fixed costs ÷ (Price − Variable cost)
Break-even sales = Break-even units × Price
Example
Fixed costs are 9,000 a month and each unit contributes 20, so break-even is 450 units.
Try the tool
Common questions
Does break-even include my salary?
If you pay yourself a fixed wage, include it in fixed costs.
How often should I recalculate it?
Whenever prices, costs or fixed expenses change.