Start with contribution per unit
Contribution per unit equals selling price minus variable cost per unit. Variable cost changes as you sell more: for example, a component, delivery, commission or payment fee. Fixed cost is the recurring cost your model includes even when you sell nothing, such as rent, software or core salaries.
Calculate the planning target
Break-even units equal fixed costs ÷ contribution per unit. The calculation is sensitive to the inputs, so use the same period for each number—usually one month. If contribution is zero or negative, the model cannot break even through higher volume alone.
Use three scenarios
Create a base case, a cautious case with lower price or higher cost, and a stretch case. Then ask whether the required number of orders is operationally realistic. A high break-even number may signal that price, cost structure, capacity or product mix needs attention before the next expense commitment.
Keep cash-flow timing separate
A profitable invoice can still be unpaid. Add your payment terms, inventory deposits, loan instalments and tax dates to a cash forecast. Break-even explains operating economics; a cash forecast explains whether bills can be paid on time.
Sources and further reading
This is a planning model; it does not replace accounting records or financial advice.