What break-even means
The break-even point is where total revenue equals total cost. At that volume, operating profit from the analyzed activity is approximately zero.
The formula
Break-even units = fixed costs ÷ (selling price per unit − variable cost per unit). The amount in parentheses is contribution per unit.
Separate fixed and variable cost
Rent, base software, and certain salaries may behave like fixed costs in a planning period. Materials, transaction fees, shipping, and commissions often change with each unit sold.
Run scenarios
Break-even analysis becomes more useful when you test several prices, costs, and demand levels instead of relying on one forecast.