Calculate your break-even quantity
The U.S. Small Business Administration defines the unit calculation as fixed costs divided by selling price less variable cost per unit.
For monthly fixed costs of 1,200, a price of 5 and variable cost of 2, each sale contributes 3 toward fixed costs. Break-even is 400 units, generating 2,000 in revenue. At 500 sales, the model leaves 300 above entered costs. These are illustrative values in whichever currency you select.
Fixed costs and variable costs
Fixed costs include expenses that remain steady over the chosen month, such as rent. Ingredients, packaging and per-item fees are often variable. Split mixed costs carefully and use consistent assumptions for owner labor. Do not include the same allocated overhead in both fields.
Where this estimate stops
A price at or below variable cost cannot cover positive fixed costs through more sales. The result rounds up to whole units and assumes everything produced is sold at a constant price and cost. Different products, capacity changes, losses, taxes and demand require a fuller plan. It does not forecast actual sales or cash flow.