Break-Even Is a Volume
How many do you have to sell before you make anything at all?
The idea
Break-even is the number of units at which contribution covers fixed costs exactly.
In the real world
With £10,000 of fixed costs and £25 contribution per unit, 400 units cover the month.
Going deeper
Break-even converts fixed costs into a countable target: the number of units whose contribution exactly covers them. It is useful precisely because it is a number of things rather than an amount of money.
It also exposes how sensitive that target is to price. Cutting contribution from £25 to £20 — a 20% reduction — raises break-even from 400 to 500 units, a 25% increase in the volume needed just to stand still. Discounts are usually evaluated against revenue, where the effect looks modest; evaluated against break-even volume, the same decision looks very different.
Where it stops applying
Break-even assumes fixed costs stay fixed and contribution stays constant across volume, and both break at scale. It is a planning tool for a range, not a formula that holds everywhere.
Why it matters
It converts an abstract target into a countable number you can check against reality.
Try this today
Calculate your break-even volume and compare it with what you actually sold.
Test yourself
Fixed costs are £10,000 a month and each sale contributes £25 after direct costs. Marketing proposes a discount taking contribution to £20. What happens to the break-even volume?
Show the answer
It rises from 400 units to 500 — a 25% increase in the volume required just to stand still. Discounts cut the contribution that pays the fixed costs, so a modest price change moves the target far more than it appears to.
Learn this in the feed Answering from memory, then again days later, is what makes it stick.