Know the sales volume your business needs
Break-even analysis links your fixed costs, unit economics and sales volume. It helps test whether a business plan is operationally plausible.
By CashOrbits · Published 3 November 2026 · Reviewed 3 November 2026
Separate fixed and variable costs
Fixed costs stay broadly unchanged across the volume you are analysing: rent, core software and some salaries. Variable costs rise with each sale, such as materials, packaging and payment charges. A cost may change category over a longer time horizon.
Calculate contribution
Subtract variable cost per unit from selling price. A selling price of 150 and variable cost of 60 leaves 90 of contribution per unit to cover fixed costs. If contribution is zero or negative, selling more cannot cover positive fixed costs in this model.
Round up to an achievable volume
With monthly fixed costs of 20,000 and contribution of 90, break-even is 222.22 units. Because you cannot sell a fraction of a unit, plan on at least 223 units. Revenue at that volume is 33,450.
Check capacity and cash timing
Ask whether you can produce and sell the required units. Profit break-even does not ensure enough cash to buy inventory or wait for customers to pay. For multiple products, use a realistic weighted sales mix and revisit it when prices or demand change.
Sources & further reading
Official consumer or small-business resource. The worked examples are CashOrbits illustrations, not market quotes. Source reviewed 3 November 2026.
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