How it works
Each sale contributes its price minus its variable cost toward fixed costs. Once enough sales cover all fixed costs, every additional sale is profit.
Formula
Break-even units = Fixed costs ÷ (Price − Variable cost)
Example
$5,000 fixed costs, $50 price, $20 variable cost: 5,000 ÷ 30 = 167 units ($8,350 revenue).
Assumptions & limitations
- Results are rounded for display.
Frequently asked questions
What counts as a fixed cost?
Costs that don't change with sales volume, such as rent, salaries and software subscriptions.