Break-Even Point

Definition

The sales volume at which total revenue equals total costs, producing zero profit. Break-even units = Fixed Costs ÷ (Price per Unit − Variable Cost per Unit). A SaaS product with $50,000 in monthly fixed costs, a $99 price point, and $12 variable cost per customer breaks even at 575 customers. Below that, every new subscriber reduces the loss; above it, every new subscriber contributes $87 directly to profit. Break-even analysis is the single most important financial exercise for pricing decisions, minimum viable scale, and go/no-go thresholds on new product launches.