Price Calculation: Breakeven Pricing


pricing, analysis, calculations, profitability

Review the activity below or download the PDF student worksheet

Student Discussion Activity

Often a firm will calculate the break-even point for a price. That is, if we set the price at $X, then how many units will we need to sell to cover costs (that is, our break-even point).

Work through the following two examples to gain a better understanding of this approach.

Using break-even analysis:

  1. How many units need to be sold to break-even if the product is sold for $30?
  1. How many units need to need to be sold to break-even if the product is sold for $15?

No. of Units

Allocated Fixed Costs

Variable Cost/Unit

Total Production


Average Unit Cost

Unit Price

Total Sales Revenue

Gross Profit
















Student Discussion Questions

  1. Start by completing the above table.
  2. How would the firm use this break-even information?
  3. What do you think you would set first: the sales target or the price? Why?
Related Activities

What Price Mark-up is Needed?

Price Calculations – Marginal Analysis

Price Calculation: Target Profit Pricing