ONEDEAL EDUCATIONAL GUIDE
Editorial standards · Calculation methods
Hypothetical single-product business
- Monthly fixed operating costs
- $6,000
- Selling price per unit
- $100
- Variable cost per unit
- $40
- Contribution per unit
- $60
- Units to cover fixed costs
- 100
At 120 units, modeled operating profit is $1,200 before taxes and debt payments. At 80 units, the modeled loss is $1,200. The calculation assumes the same price and cost for every unit sold.
Distinguish profit from available cash
The break-even model asks whether sales cover the entered operating costs. It does not show when a customer pays, when inventory must be purchased or how much principal a lender collects. Build a separate cash schedule for those timing differences.
Separate one-time startup spending from monthly operating needs. Then state what the financing buys and how that change supports repayment. A forecast should identify the assumptions that matter most, such as sales volume, collection delays or supplier costs.
Prepare an offer comparison
Bring a specific use-of-funds amount, existing obligations and a conservative operating case. Compare the payment frequency, fees, collateral, personal guarantees and early-payoff conditions in writing. The structure matters as much as the advertised number.
Our loan tool fits fixed-rate debt repaid through equal monthly amortizing payments. It does not model a revolving line, daily remittances or a revenue-based agreement. Our break-even tool is an operating estimate, not an SBA eligibility check or a promise that a lender will fund the business.
- Recalculate at lower sales volume.
- Include variable transaction costs in the unit margin.
- Keep cash reserves and startup purchases outside the operating-profit figure.
Sources and method
Worked examples use the stated hypothetical assumptions. Source links support the general definitions and rules; they do not verify a specific product, offer or individual outcome.
Examples are educational estimates, not current product offers, approvals or individualized investment, tax, insurance or legal advice. Confirm current terms and rules for your circumstances.