Break-Even Analysis Explained for Small Businesses
Updated: October 2026. Rules and rates change; confirm with a professional or official source.
Your break-even point is the sales level where revenue equals total costs: no profit, no loss.
The formula
Break-even units = fixed costs ÷ (price − variable cost per unit).
Example
Fixed costs of $5,000 a month, a $50 price and $20 variable cost leave $30 per unit. $5,000 ÷ $30 = 166.7, so you need 167 units a month. To also earn $3,000, you need 267 units.
How to use it
Test price changes, cutting a fixed cost, or lowering variable costs. Small price changes often move break-even a lot.
Limits
It assumes costs and prices stay constant. Treat it as a planning tool, not a forecast.
Try the break-even calculator.
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