Contribution pays the period's fixed cost
Break-even is the sales volume at which contribution from sold units exactly covers a stated period of fixed cost. It is not the point at which cash arrives, tax is paid, or an owner has earned a salary unless those amounts are included in fixed cost. Contribution matters because revenue alone does not pay the material and transaction cost triggered by each sale.
Why break-even needs a whole-unit ceiling
Contribution per unit = selling price − variable cost. Break-even units = fixed costs ÷ contribution, rounded upward. Break-even revenue = rounded units × selling price. Rounding up is essential: 382.98 sales do not cover a cash bill, and the 383rd sale contributes the final amount needed.
The 383rd sale closes the default gap
At $75 price less $28 variable cost, each unit contributes $47. $18,000 ÷ $47 is 382.9787, therefore 383 units. Revenue at that count is 383 × $75 = $28,725. Variable cost at that level is $10,724, leaving $18,001 contribution; the extra dollar comes from rounding to a whole unit.
Testing price and cost pressure
Use it to test a launch quantity, a service package, a market stall, or a monthly sales target. Change price and variable cost separately: a price reduction can require substantially more volume when contribution is already thin.
Where a single-product model ends
Capacity limits, returns, product mix, volume discounts, stepped wages, financing, income tax, and fixed costs that change after a threshold are outside this one-product model. If fixed cost is monthly, use a monthly selling price and monthly cost assumptions.
Classifying costs on the wrong side of the formula
Do not classify all payroll as variable merely because employees are busy, or postage as fixed when it happens on every shipment. A price equal to or below variable cost cannot break even by selling more; the form rejects that condition.
A sales-volume threshold, not a unit price
This page solves for volume using fixed and variable costs. A markup converter prices one unit from its cost but does not establish whether total overhead is recovered.
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