Calculating break-even: when does the business pay for itself?
Calculate the break-even point from fixed costs and contribution margin, then test how price, volume, and costs change it.
Quick answer
Calculate the break-even point from fixed costs and contribution margin, then test how price, volume, and costs change it.
Key takeaways
- The break-even point is reached when revenue covers the costs included in the calculation.
- If a product sells for EUR 80, has EUR 30 of variable cost, and the business carries EUR 10,000 of monthly fixed cost, the contribution is EUR 50 and the simple break-even volume is 200 units.
- Test the result against discounts, payment fees, returns, idle capacity, and different product margins.
Turn a financial plan into a required sales volume
The break-even point is reached when revenue covers the costs included in the calculation. Start with the contribution per unit: selling price minus variable cost per unit. Divide monthly fixed cost by that contribution to estimate the required sales volume.
If a product sells for EUR 80, has EUR 30 of variable cost, and the business carries EUR 10,000 of monthly fixed cost, the contribution is EUR 50 and the simple break-even volume is 200 units.
Test the result against discounts, payment fees, returns, idle capacity, and different product margins. Most importantly, compare the required volume with realistic demand and operational capacity. Break-even describes profitability under assumptions; it does not prove that cash will be available at the right time.
Sources and further information
Related workflows in accuno
These product pages show how accuno supports the workflows described in this guide.
Sources and further information
Editorial note
Prepared by the accuno Editorial Team and reviewed against the listed primary sources and the implemented product scope.
These articles provide general guidance and do not replace legal, tax, or business advice. Confirm your specific situation with a qualified professional.