The sales volume or revenue at which total contribution exactly covers fixed costs, so profit is zero.
The break-even point is the level of sales where the business neither makes nor loses money. Every unit sold above it adds its contribution, price less variable cost, to profit; every unit short of it leaves part of fixed costs uncovered. It can be stated in units or in revenue.
Break-even units = fixed costs ÷ (price per unit − variable cost per unit). Break-even revenue = fixed costs ÷ contribution margin ratio, where the ratio is contribution per unit ÷ price.
Fixed costs of $150,000, a price of $50 and a variable cost of $30 give a contribution of $20 a unit. Break-even is $150,000 ÷ $20 = 7,500 units, or 7,500 × $50 = $375,000 of revenue. The contribution margin ratio of 40% gives the same: $150,000 ÷ 0.40 = $375,000.
Classing semi-variable costs as fixed. Using one average price and cost for a business with many products, where the break-even moves whenever the mix does. The full guide is break-even analysis.