Break-even Analysis

Break-even tells you how much sellable output you need to cover your fixed costs. It’s the fastest way to see whether your plan is real.

• Fixed costs don’t care about motivation—only revenue covers them.
• Break-even = Fixed costs ÷ Contribution per unit.
• Use conservative pricing and conservative sellable output.

Decision path

• If break-even volume is unrealistic, you must change the model: price, costs, or cadence.
• If fixed costs are high, reduce overhead or increase utilization.
• If contribution per unit is low, fix pricing or variable costs first.

1. List fixed costs per month (rent, utilities baseline, software, debt).
2. Calculate contribution per unit (price − variable cost per unit).
3. Divide fixed costs by contribution per unit to get break-even units.
4. Convert units to your production plan (batches/week, grams/month).
5. Run worst-case and base-case scenarios.
6. Use the result to pick one lever to improve.

Quick example

Break-even quick table:

If 40 units/month is impossible with your cadence, your plan needs a redesign—not more hustle.

• Using gross margin instead of contribution per unit.
• Leaving out fixed costs that are ‘small’ (they add up).
• Assuming best-case sellable output every time.
• Not updating when pricing/costs change.
• Confusing break-even with profit (profit starts after break-even).

FAQ

What’s the difference between break-even and target profit?

Break-even is survival. Target profit is what you want after survival.

Should I do break-even per batch or per month?

Both. Batch for operations decisions; month for business reality.

What if my contribution per unit changes?

Then break-even changes. That’s why you recalc whenever price or variable costs change.

Want the full Blueprint?

This page gives you the map. The paid Academy contains the full SOPs, templates, and execution workflow — start to finish.

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