Break-Even Point
The point where your total revenue equals your total costs, resulting in zero profit or loss.
Definition
The break-even point is the number of units sold (or revenue earned) where total costs equal total revenue. Below this point you lose money; above it you profit. The formula is: Break-Even Units = Fixed Costs / (Price per Unit - Variable Cost per Unit). The difference between price and variable cost is called the contribution margin. Break-even analysis helps founders understand the minimum viable scale of their business.
Why it matters for founders
Knowing your break-even point tells you exactly how many customers or sales you need to stop losing money. It informs pricing decisions, marketing budgets, and whether your business model is viable at all.
Example
A SaaS product has $10,000/month in fixed costs. Each customer pays $50/month with $5 in variable costs (hosting, support). Contribution margin = $45. Break-even = $10,000 / $45 = 223 customers.
How Foundra helps
Foundra's Pricing & Packaging card helps you model pricing that achieves break-even faster by testing what customers are willing to pay.
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Related terms
Contribution Margin
The amount each sale contributes toward covering fixed costs and generating profit.
Unit Economics
The revenue and costs associated with a single unit of your business (usually one customer).
Burn Rate
How fast your startup is spending cash each month.
Runway
How many months your startup can survive before running out of cash.