The break-even point is the moment your revenue exactly covers your costs—no profit, no loss. It tells you how much you need to sell before you start making money.
Formula
Break-Even Point (in units) = Fixed Costs / (Price per Unit − Variable Cost per Unit)Example:
If your fixed monthly costs are $5,000, your product sells for $50, and your variable cost per unit is $30:
5,000 / (50 - 30) = 250 unitsYou need to sell 250 units per month just to break even.
Why It Matters
Knowing your break-even point helps you set realistic sales targets, price your products smartly, and avoid panic during slow weeks—it’s your minimum survival number.
Tip: Break-even isn’t just for startups. Use it regularly to test new product ideas, pricing strategies, or staffing changes.