Break-even is the sales volume where total revenue equals total cost. Each unit you sell contributes its price minus its variable cost toward paying off the fixed costs. Break-even units = fixed costs / (price - variable cost per unit). Break-even revenue = break-even units x price.
Example: fixed costs of 5,000, a price of 25 and a variable cost of 10 give a contribution of 15 per unit. 5,000 / 15 = 333.3, so you must sell 334 units (8,350 in revenue) before you make a profit.
Costs that do not change with volume: rent, salaries, software subscriptions, insurance, equipment. Variable costs rise with each unit: materials, packaging, shipping, payment fees.
It is how far expected sales sit above break-even, as a percentage of expected sales. A 25% margin of safety means sales could fall by a quarter before you start losing money.
Then every sale loses money and you never break even. Raise the price or cut variable costs. Check your percentages with the margin calculator.
See also: margin calculator · markup calculator · ROI calculator