Which lowers my break-even more: a 10% price increase or a 10% cut in product cost?
On paper the 10% price increase wins whenever your price is above your variable cost, because 10% of the price is a bigger amount than 10% of the cost. In the example below, the price rise brings break-even down from 500 units to 400, while the cost cut only gets it to 435.
The test: three runs with the same fixed costs
Open the Break-even calculator and keep fixed costs at 10,000 every time, changing only one number per run:
- Today: price 50, variable cost 30. Contribution 20, break-even 500 units, revenue 25,000.
- Price up 10%: price 55, variable cost 30. Contribution 25, break-even 400 units, revenue 22,000.
- Cost down 10%: price 50, variable cost 27. Contribution 23, exact break-even 434.78 rounded up to 435 units, revenue 21,750 at that volume.
The price rise saves 100 units a month; the cost cut saves 65. That is a 35-unit gap in favour of price.
Why price wins the arithmetic
Both levers work through the contribution, the gap between price and variable cost. Adding 10% to a price of 50 puts 5 more into each unit's contribution; taking 10% off a cost of 30 puts in only 3. As long as the price is above the cost, which is the condition for a break-even to exist at all, the same percentage of the price is always the larger amount.
Notice too that break-even revenue was lower in the cost-cut run, 21,750 against 22,000. Revenue alone is a misleading way to compare the two; what counts is how many units you actually have to sell.
Why the maths is not the whole decision
- A higher price can mean fewer buyers, and the calculator does not predict demand. If your customers are price sensitive, you might lose more sales than the 100 units you saved.
- A cost cut is usually invisible to customers, so demand holds, provided quality and delivery speed do not suffer.
- You can combine them: a small price rise plus a modest supplier discount, then enter both numbers to see the joint effect.
To find a price that hits a target margin after fees, use the Selling-price calculator; to check the per-unit margin after any change, use the Profit margin calculator.
Common questions
Does raising the price always win?
In the arithmetic, yes, while the price is above the variable cost. In the market it depends on whether customers accept the new price, which the calculator cannot know.
Why 435 and not 434?
The exact figure is 434.78. Selling 434 leaves you just short of break-even, so the calculator rounds up.
Can I save all three scenarios?
The tool saves nothing, but the copy result button copies the figures so you can paste them into your notes.