How this calculation works
Contribution per unit = selling price minus variable cost. Break-even units = fixed costs divided by contribution per unit.
If contribution is zero or negative, the product cannot break even at that price.
Business and pricing
Estimate how many units must be sold before fixed costs are covered.
Contribution per unit = selling price minus variable cost. Break-even units = fixed costs divided by contribution per unit.
If contribution is zero or negative, the product cannot break even at that price.