Break-Even Analysis for Small Businesses

Break-even analysis reveals how many units you need to sell or how much revenue you must generate to cover fixed and variable costs.

Calculate contribution margin by subtracting variable costs from unit price—this figure fuels the rest of the break-even math.

Divide total fixed costs by contribution margin to find the unit break-even point, or use revenue numbers for service businesses.

Revisit the calculation whenever costs change so pricing and sales targets stay aligned with profitability.