We present a theory of optical bistability for a Fabry-Perot cavity containing a medium with nonlinear refraction but linear absorption with only plane-wave and slowly varying envelope approximations. An analytic expression for the critical intensity I
cfor the onset of bistability is derived and used to compare cavity designs. It is shown that 1) the important material parameter for minimum I
cis the ratio

) the limit to I
cis set by limitations on finesse due to inhomogeneities rather than the absorption itself, and 3) the cavity design which gives lowest I
cfor a given finesse is that for which the mirror transmissivity equals the absorption per pass; at high finesse this design leads to a total peak cavity transmission of 1/4 when mirror reflectivities are equal.