Break-Even Selling Price Formula

Finance Formula • Published on July 30, 2026 • Last updated August 09, 2026

Mathematical Equation

$$\text{Break-Even Price} = \frac{\text{Total Fixed Costs} + \text{Total Variable Costs}}{\text{Expected Number of Units}}$$

Variable Definitions

Fixed Costs

Total overhead costs independent of production volume

Total Variable Costs

Total variable production cost for the full run

Number of Units

Target volume or expected quantity of units produced

Detailed Explanation

In-Depth Guide

The break-even selling price formula calculates the minimum price per unit required to cover all production costs for a target sales volume.

How to Calculate: Step-by-Step

1. Sum Total Fixed Costs and Total Variable Costs. 2. Divide by the Expected Number of Units. 3. Output is the minimum unit selling price required to break even.

Worked Calculation Example

Fixed Costs = $50,000, Variable Costs = $30,000, Target Volume = 1,000 units: - Total Costs = $80,000. - Break-Even Price = $80,000 / 1,000 = $80 per unit.

Common Use Cases

  • Target pricing strategy
  • Manufacturing cost estimation
  • Custom order quoting

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