Break-even & margin

Break-even is the level of sales at which a business exactly covers its costs, making neither profit nor loss. To find it, split costs into fixed costs — rent and bills you pay whatever you sell — and variable costs that rise with each unit. The contribution margin is the price of a unit minus its variable cost: the amount each sale contributes toward covering the fixed costs. Once total contributions add up to the fixed costs, you have broken even, and every sale beyond that becomes profit. Break-even analysis shows how many units you must sell to survive, how pricing and costs shift that threshold, and why a high-margin product needs fewer sales to reach it.