Determining the number of products to produce to begin to make a profit is known as the break-even point.  When a new product is being developed, firms start in the red.   The cost of research and development, promotion, and distribution make it tough to start out a new product, usually found during the introductory stage of a products life cycle (life cycle discussed in one of my previous blogs).  To begin making revenue, a firm must find out how many widgets (aka units of the product) to sell to see a return on their hard work.  This break-even point is found relatively easily, the break-even point equals the fixed costs divided by the price minus the variable costs.  (fixed and variable costs discussed in my previous blog as well)  To determine the amount of dollar sales needed to achieve the break-even point, you would simply mutiply the number of units needed to sell to achieve the break-even by the cost-per unit price to come up with a dollar figure.  Break-even point analysis is simple and very straightforward and easy to understand, but also important to firms to know.