Article · Tutorial

Break-even Point (explanation)

AccountingCoach · accountingcoach.com Free Beginner

A CPA's step-by-step tutorial on fixed and variable expenses, contribution margin, and the break-even point in units and in sales.

  • Fixed expenses do not change with sales; variable expenses do.
  • Contribution margin is price minus variable cost.
  • Add your desired profit to fixed costs to find the sales you need for it.
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It answers 2 questions

  1. How do I calculate my break-even point?
  2. How do I price my very first product when I have no idea what to charge?

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