Your break-even point is the number of sales at which revenue exactly covers your costs — below it you lose money, above it you profit. It is driven by your fixed costs and the contribution each sale makes (price minus variable cost). Enter the three figures to see the units and revenue you need to break even.
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Plan the numbers.
Business plan book
Model your costs.
Small business finance book
Know your break-even.
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Frequently asked questions
What is contribution margin?
It is the price of a unit minus its variable cost — the amount each sale contributes toward covering your fixed costs and then profit.
How do I lower my break-even point?
Cut fixed costs, raise the price, or reduce the variable cost per unit. Any of these means fewer sales are needed to break even.