Formula

Contribution margin per unit = selling price − variable cost. Break-even units = fixed costs ÷ contribution margin. Break-even revenue = break-even units × selling price.

Worked example

Fixed costs of 10,000, price of 50, and variable cost of 30 produce a 20 contribution margin, 500 break-even units, and 25,000 break-even revenue.

Privacy

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Limitations

This simplified model assumes constant selling price, constant variable cost, and one-product unit economics. It does not model taxes, capacity changes, demand, product mix, or accounting advice.

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