Formula
Contribution margin = price − variable cost − fees. Break-even units = fixed costs ÷ contribution margin.
Example
Fixed costs of $12,000 a month, a product priced at $40 that costs $15 to make: the margin is $25 per unit and the break-even point is 480 units a month, or $19,200 in revenue.
Frequently asked questions
Fixed vs. variable costs?
Fixed costs stay the same with no sales (rent, salaries). Variable costs grow with each sale (materials, shipping, commissions).
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.