Formula
Break-even units = Fixed costs ÷ (Unit price − Unit variable cost)Break-even sales volume
Subtract variable unit cost from selling price to find unit contribution. Divide fixed costs by that contribution and round up to a whole unit.
With $20,000 fixed costs, an $80 selling price and $48 variable cost, each unit contributes $32. The business must sell 625 units, producing $50,000 of revenue, to break even under these assumptions.
When the model changes
Tiered pricing, capacity limits, step-fixed costs and changing product mix require a scenario model rather than one fixed break-even point.
Assumptions
- Price and variable cost remain constant over the volume range.
Sources and methodology
CalcMotive publishes the formula and assumptions so you can decide whether the estimate fits your use case. See our methodology standards.