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Cost & Revenue Details

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Rent, salaries, insurance, software — costs that don't change with sales
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Materials, packaging, commissions — costs that scale with units sold
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How Break-Even Analysis Works

Break-Even Point (units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). The denominator (Price - Variable Cost) is called the Contribution Margin — the amount each sale contributes toward covering fixed costs and eventually generating profit.

Contribution Margin Ratio

Contribution Margin Ratio = (Selling Price - Variable Cost) / Selling Price. A ratio of 60% means 60 cents of every sales dollar goes toward fixed costs and profit.

Margin of Safety

The margin of safety is how far your current sales are above the break-even point. A larger margin of safety means less risk — your business can withstand a larger drop in sales before operating at a loss.

Break-Even for Startups

For new businesses, break-even analysis helps determine: How low can we price? How many customers do we need? What's the minimum viable scale? Running this analysis before launch helps avoid underpricing and undercapitalization.