The break-even point is the sales volume at which your revenue exactly covers your costs, so your profit is zero. You find it by dividing fixed costs by the contribution margin per unit. Below that volume every month adds a loss; above it, each additional unit adds its full contribution to profit.
An example. With 40,000 euros of fixed costs and 25 euros of contribution per unit, you break even at 1,600 units.
You can express break-even in units or in revenue. In units it is fixed costs divided by contribution margin per unit. In revenue it is fixed costs divided by the gross margin written as a decimal.
Worked example for a small studio. Fixed costs are 8,000 euros a month: rent, one salary, software and insurance. A course sells for 90 euros, and the variable cost per participant, materials plus payment fees, is 15 euros. Contribution margin is 75 euros. Break-even is 8,000 divided by 75, which is 107 participants per month, or 9,630 euros of revenue. Raise the price to 110 euros and contribution rises to 95 euros, so break-even falls to 85 participants. A price increase of about 22 percent cuts the required volume by about 20 percent.
Two things confuse founders. The first is which costs count as fixed. Your own salary counts if you pay yourself. A part-time helper whose hours grow with sales is variable, not fixed. Sort every cost into the right column before you calculate, because moving one 2,000 euro item shifts break-even by 27 participants.
The second is treating break-even as a finish line. It is a monthly condition, not a one-time event. A studio that breaks even in June can fall below it in August when demand drops, so calculate break-even for every month of the year.
Keep the break-even point apart from the cash break-even, which you reach when incoming payments cover outgoing payments in the same month. That usually happens later, because customers pay after you deliver.
The break-even point is part of the financial section of a Foundor plan.
