Business & Commerce
Intermediate

Break-Even (Units)

The number of units that must be sold to exactly cover all costs.

Formula

Q=Fixed CostsPrice−Variable CostQ = \dfrac{Fixed\ Costs}{Price - Variable\ Cost}

Variables

QBreak-even quantity
Fixed CostsTotal fixed costs
PriceUnit price
Variable CostPer-unit variable cost

Example

$40k fixed / $20 CM = 2000 units

Did You Know?

Above the break-even point a business is profitable; below it, every sale still loses money overall.

break-evencostingplanning