Why does a small price cut need so many more sales?

A price cut comes straight off your per-unit contribution, which is usually much smaller than the price. Shrinking the contribution sharply raises how many units you need — this tool makes that trade-off visible.

Does this include profit?

No — break-even is the zero-profit point. To include a target profit, add it to your fixed costs before entering them, and the result becomes the units to hit that profit.

What if I sell multiple products?

This assumes one price and one variable cost. For a mixed range, run each product separately or use an average contribution, and confirm blended figures with your accountant.

Break-even Price Check Calculator

The break-even price check helps you test a proposed price before you commit to it. Enter the fixed costs for the production run or period, the price you are thinking of charging, and the variable cost per unit. It shows how many units that price forces you to sell to break even — so you can see whether a lower price that needs far more volume is really worth it. Results are estimates for planning; run pricing decisions past your accountant.

Fixed costs for the run ($)

Proposed price ($)

Variable cost per unit ($)

Result

The formula

Break-even units = fixed costs ÷ (price − variable cost per unit)

Raising the price increases the contribution per unit (price − variable cost), which lowers the number of units you must sell. Lowering the price does the opposite. This tool lets you compare the volume different prices demand, which is often more revealing than the price alone.

Worked example

Fixed costs for the run are $8,000, the proposed price is $50, and each unit costs $22 to make.

Contribution per unit = 50 − 22 = $28
Break-even units = 8,000 ÷ 28 = 286 units (285.7 rounded up)
Break-even revenue ≈ 286 × 50 = $14,300

Drop the price to $40 and the contribution falls to $18, pushing break-even to 445 units — a big jump in volume for a small price cut.

Frequently asked questions

Why does a small price cut need so many more sales?: A price cut comes straight off your per-unit contribution, which is usually much smaller than the price. Shrinking the contribution sharply raises how many units you need — this tool makes that trade-off visible.
Does this include profit?: No — break-even is the zero-profit point. To include a target profit, add it to your fixed costs before entering them, and the result becomes the units to hit that profit.
What if I sell multiple products?: This assumes one price and one variable cost. For a mixed range, run each product separately or use an average contribution, and confirm blended figures with your accountant.

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