Most of the guides on this site circle the same arithmetic without ever writing it down. How much do you have to sell before the month stops costing you money? It is the first number in a business plan, the number behind every pricing argument, and the one people most often carry around as a vague feeling instead of a figure.
Fill in four things and it comes out.
Break-even
Contribution / unit—
Break-even, units—
At that volume—
How it works
Every sale brings in the price and takes back out whatever that unit cost you to make or buy. What is left over is the contribution — the part of the sale that goes towards the costs you pay whether you sell anything or not: rent, salaries, software, insurance.
Divide your fixed costs by that contribution and you have the number of units that covers them. Sell exactly that many and you end the month at zero. Every unit after it is profit; every unit short of it is a loss.
What counts as fixed, and what does not
Fixed costs are the ones that do not move with volume: premises, permanent staff, subscriptions, accountancy, insurance. Unit cost is what one more sale actually costs you: materials, packaging, the wholesale price, payment fees, delivery. Commission paid per sale belongs in the unit cost, not in fixed costs — putting it in the wrong place is the most common way this sum comes out wrong.
When it says no volume works
If your price is at or below your unit cost, the contribution is zero or negative and there is no break-even point at all: selling more loses more. The calculator says so rather than returning a meaningless number. The fix is on the price or the cost side, never on the volume side.
The limits of it
This is a single-product model with one price and one unit cost, which is a simplification of nearly every real business. It ignores tax, stock already paid for, seasonality, and the fact that a bigger volume often changes your unit cost. It is a starting figure to argue from, not a forecast.
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