Test the same threshold against demand cases
Demand cases test whether a fixed break-even threshold looks feasible. They do not change that threshold unless price, variable cost, product mix or a capacity-step cost also changes.
| Demand case | Unit contribution | Break-even threshold | Units above / (below) |
|---|---|---|---|
| Low: 90 units | 80 − 50 = 30 CU | 3,600 ÷ 30 = 120 units | (30) |
| Base: 120 units | 30 CU | 120 units | 0 |
| High: 150 units | 30 CU | 120 units | 30 |
Build the threshold from a consistent model
required units = ceil((fixed costs + target profit) / unit contribution)
- fixed costs
- Costs held fixed for the chosen scenario and period (currency per period) — business records or user assumption
- target profit
- Optional user-selected amount above fixed-cost recovery (currency per period) — user assumption
- unit contribution
- Selling price less variable cost per unit (currency per unit) — calculated from user inputs
- ceil
- Round upward to the next whole operational unit (whole units) — calculation rule
Worked scenario: recover period fixed costs
Neutral user inputs for one month, before indirect tax.
| Measure | Value |
|---|---|
| Selling price | 80 currency units per unit |
| Variable cost | 50 currency units per unit |
| Unit contribution | 30 currency units per unit |
| Monthly fixed costs | 3,600 currency units |
| Target profit | 0 currency units |
3,600 ÷ 30 = 120 units. This is the minimum whole-unit threshold in the entered scenario. It becomes actionable only after comparing 120 with demand, stock and available capacity for the same month.
Match the threshold to the decision
| Tool or decision | Included recovery boundary | Time or output basis | What to test next | What the result cannot establish |
|---|---|---|---|---|
| Target Profit Units & Revenue Planner | Period fixed costs plus a user-selected target profit | Whole units and revenue for the stated period | Demand, capacity and price or cost sensitivity | That the target profit will be achieved |
| Location Break-Even Planner | Location-specific fixed costs plus a disclosed shared allocation | One location and one period | The existing-location alternative, capacity and dated cash | Site quality, demand or an expansion recommendation |
| Equipment Investment Break-Even Planner | Entered net investment less explicit fixed savings and contribution gains | Recovery amount or period under the tool contract | Financing, cash timing, useful life and downside cases | Net present value, a purchase recommendation or financing suitability |
| Hiring Break-Even Planner | Loaded hire cost versus realistic billable contribution | First year or another declared period | Labour budget, capacity, ramp and downside | Worker classification, demand or a hiring recommendation |
| New Product Launch Break-Even Planner | Launch cost, selected period cost and optional target profit | Whole launch units and revenue | Cost uncertainty, capacity, demand and cash timing | Product success or a sales forecast |
| Fixed Cost Recovery Planner | One named incremental fixed-cost change | Incremental whole-unit threshold for the stated period | Planned volume and capacity | Whole-business profit or cash break-even |
Open the matching threshold planner
- Target Profit Units & Revenue Planner
Set the sales threshold for a target profit
- Location Break-even Planner
Test one location break-even threshold
- Equipment Investment Break-even Planner
Test equipment investment payback
- Hiring Break-even Planner
Test a hire against billable contribution
- New Product Launch Break-even Planner
Set a new-product launch recovery threshold
- Fixed Cost Recovery Planner
Recover an incremental fixed cost
Test whether the threshold is feasible
- Fixed costs, sales and variable costs use the same period. (not complete)
- Step costs or capacity limits are modelled in a separate scenario. (not complete)
- Whole-unit rounding is upward, not to the nearest unit. (not complete)
- Demand, stock and fulfilment capacity can support the required volume. (not complete)
- Cash timing is reviewed separately from accounting break-even. (not complete)
Break-even questions
- Why are required units rounded upward?
- A fraction of an operational unit cannot recover the remaining amount, so the threshold advances to the next whole unit.
- Does accounting break-even mean cash is available?
- No. Payment and receipt dates can create a cash shortfall before or after the accounting threshold is reached.
Methodology used
- Break-even Sales methodology — Margin101
- Target Profit Units & Revenue methodology — Margin101
- Location Break-Even methodology — Margin101
- Equipment Investment Break-Even methodology — Margin101
- Hiring Break-Even methodology — Margin101
- New Product Launch Break-Even methodology — Margin101
- Fixed Cost Recovery methodology — Margin101
Related tools
- Break-even Sales Planner
Find the units and revenue needed to cover costs or reach target profit
- Price–Volume Trade-off Planner
Find the sales volume needed to preserve contribution after changing price