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Break Even Units
500
Break Even Units vs Total Fixed Costs
Formel
How to Calculate Break Even Units
Formula
Break Even Units = Fixed Costs / (Price - Variable Cost Per Unit)
This tells you the exact number of units you must sell before you start making a profit. The contribution margin per unit is the key driver -- a higher margin means fewer units needed to break even.
Lösungsbeispiel
A business with $25,000 in fixed costs selling a product for $80 with a $30 variable cost per unit.
- 01Contribution margin per unit = $80 - $30 = $50
- 02Break even units = $25,000 / $50 = 500 units
- 03Break even revenue = 500 x $80 = $40,000
- 04Contribution margin ratio = $50 / $80 x 100 = 62.5%
Häufig Gestellte Fragen
What happens if variable cost exceeds price?
If variable cost per unit is higher than the selling price, you lose money on every unit sold. You will never break even. You need to either raise prices or reduce variable costs.
How do I reduce break even units?
Three strategies: (1) Raise your selling price, (2) Reduce variable costs per unit, (3) Reduce fixed costs. Each of these increases the contribution margin or decreases the amount you need to cover.
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