The maker's costing glossary
Break-even
The point where revenue finally covers all your costs.
Break-even is the sales volume at which total revenue equals total cost, including overhead. Below it you're losing money; above it you're profitable. It answers the question every maker eventually asks: how many do I have to sell, at this price, just to stop going backwards?
Why it matters
Break-even reframes pricing from 'does this feel right' to 'is this survivable'. It tells you whether your fixed costs are realistic for your volume, how a price change moves the finish line, and whether a wholesale order at a lower margin actually helps. It's the difference between hoping and knowing.
How to calculate it
Divide your fixed costs by the contribution margin per unit (price minus variable cost). The result is the number of units you must sell to cover fixed costs; every unit after that is profit.
Break-even units = fixed costs ÷ contribution margin per unit
Example
You have $600/month of fixed costs and each item contributes $15 after variable costs. Break-even = 600 ÷ 15 = 40 units per month before you make a cent of profit.
In practice
Seeing break-even in units is sobering and clarifying: if it's more pieces than you can physically make, the price is too low or the fixed costs too high — and no amount of hustle fixes that.
Common mistakes
- Forgetting overhead, so break-even looks far lower than it really is.
- Using price instead of contribution margin in the division.
- Ignoring that a lower price raises the number of units you must sell.
How CrafterBy handles it
With accurate unit costs and overhead in CrafterBy, the contribution margin behind break-even is already worked out for every product.