What is the break-even formula?

Break-even units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit). The denominator is called the contribution margin.

What are fixed costs?

Fixed costs don't change with production volume — rent, salaries, insurance, and loan repayments are examples.

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Break-Even

Calculate how many units you need to sell to break even.

Fixed costs (£/month)

Rent, salaries, subscriptions — costs that don't change with volume

Selling price per unit (£)

Variable cost per unit (£)

Materials, packaging, commissions — costs that vary per unit sold

Using Break-Even Analysis for Pricing Decisions

Break-even analysis helps you set minimum viable prices and understand how changes in costs or volume affect profitability. If your break-even point is too high to reach realistically, you need to either raise prices, reduce fixed costs, or lower variable costs.

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