What is a break-even point?
Break-even point: The number of items at which profit is zero: fixed costs / margin per item, rounded up to a whole item.
Break-even = fixed costs / margin per item, rounded up
Example
Nora's fixed costs are $700 a month and each bun adds $2.50 of margin. $700 / $2.50 = 280 buns a month, about 70 a week. Below that she loses money; above it every bun adds $2.50 to profit.
Made-up people and numbers from the cases of our course; the math is real.
A common mistake
Dividing by the price: $700 / $4.00 = 175 buns. Each bun covers fixed costs only with its margin.
Try it with your own numbers: Break-even calculator (free, no sign-up).
Practise this in block 1
Block 1 of Ownwise is free, with no account needed to start: short lessons on costs, margin and break-even, then a made-up case where you make the decisions.