Why Profitable Sales Can Still Miss Break-Even

Summary

Hollow Point Trading shares a video explaining why positive contribution per sale does not guarantee an operating profit. Using a $10 product, $5 variable cost per unit, and $500 in fixed costs, it shows how sales volume determines whether a business reaches break-even.

https://youtu.be/57530MNuVLE

A profitable unit can still leave the business below break-even #Co...

Why Profitable Sales Can Still Miss Break-Even
Positive contribution from each sale does not guarantee an operating profit. Consider a hypothetical single product selling for ten dollars, with five dollars of variable cost per unit and five hundred dollars of fixed operating costs per period. Assume every unit produced is sold, and these costs stay constant within the relevant range. Each un...

break-even analysis contribution margin fixed costs variable costs operating profit sales volume unit economics

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