Result
Minimum selling price
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Minimum price = variable cost per unit + fixed costs for the period ÷ expected sales volume. The second part is the share of fixed costs that lands on one unit at that sales volume.
A common pricing mistake is assuming any price above variable cost is already profitable. That's technically true for a single extra sale on top of an already-covered base (the marginal-cost view), but if the entire volume sells at a price that only covers variable cost, fixed costs for the period go uncovered — the business loses money overall even while every individual sale shows a positive contribution margin.
The result depends on the assumed volume: the same product allows a lower minimum price at a higher expected sales volume, because fixed costs spread across more units. This connects directly to the break-even point — the minimum price at a volume equal to the break-even point is exactly the price at which profit is zero.