A LITTLE PRACTICE, A LOT THAT STAYS
Break-even formula: a worked example and free practice cards
The break-even point is the sales level where operating profit is zero: revenue covers both variable and fixed costs.
The formula
Break-even units = total fixed costs ÷ contribution margin per unit.
Unit contribution margin is selling price minus variable cost per unit. This simple model assumes positive contribution, a consistent unit price and variable cost, and fixed costs unchanged within the relevant activity range.
Try an example
A product sells for €30 and has €18 variable cost per unit. Fixed costs are €3,600. Unit contribution is €12, so break-even is 3,600 ÷ 12 = 300 units.
Check: 300 × €30 = €9,000 revenue. Costs are €3,600 + (300 × €18) = €9,000. Revenue and costs match.
A common mistake
Dividing fixed costs by the selling price ignores variable costs. Divide by contribution per unit instead. If the result is fractional and only whole units can be sold, round up to cover all costs.
Check your understanding
If fixed costs are €4,800 and contribution per unit is €16, how many units break even?
Reveal the answer
300 units: 4,800 ÷ 16.
Practise with the free accounting deck →
For more detail, see OpenStax’s break-even chapter. This is an introductory revision aid, not business or tax advice.
Written for Recall · Updated 3 November 2026