Frequently asked questions
What is the break-even point?
It is the number of units you need to sell in a period so revenue exactly covers your fixed and variable costs, with no profit and no loss. Selling below that number means a loss; above it, profit begins. It is calculated by dividing fixed costs by the difference between the unit sale price and the unit variable cost — that difference is the contribution margin per unit. For example, with fixed costs of 5,000,000, a sale price of 50,000 and a variable cost of 30,000, break-even is 250 units, with revenue of 12,500,000 and a contribution margin of 40%.
Why does the tool round the units up?
You cannot sell a fraction of a unit, so the exact number (for example 76.92) is rounded up to the next whole unit (77) to make sure revenue fully covers the fixed costs.
What counts as a fixed cost here?
Costs for the period that do not change with the quantity sold, as opposed to the unit variable cost, which does grow with every sale. Examples: rent, administrative payroll, utilities.
Should price and unit cost include tax?
Enter both fields the same way, with or without tax, so the result stays consistent; the tool does not add or remove tax on its own.