What is the break-even point?▼
The break-even point is the number of units you need to sell (or revenue to earn) where total revenue equals total costs — no profit, no loss.
How is break-even calculated?▼
Break-even units = Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit). The denominator is called the contribution margin per unit.
What is margin of safety?▼
Margin of safety is how much your actual/expected sales exceed the break-even point. Higher margin of safety means your business is more resilient to drops in demand.
What are fixed vs variable costs?▼
Fixed costs don't change with production volume (rent, salaries). Variable costs change per unit (raw materials, packaging, shipping).