Break-Even Calculator
Units and revenue required to cover fixed and variable costs at a given price.
Break-Even Calculator
Analysis
Break-even point
Each unit sold contributes its price minus its variable cost toward the fixed costs. Break-even is where the contributions cover them exactly.
break-even units = fixed costs ÷ (price − variable cost per unit)
- fixed costs
- Costs that do not change with volume: rent, salaries, insurance, software
- price
- Selling price per unit
- variable cost
- Cost per additional unit: materials, shipping, payment fees, per-unit labour
- price − variable
- The contribution margin per unit
Worked example
- Fixed costs
- 50,000 per month
- Price
- 80 per unit
- Variable cost
- 30 per unit
- Contribution margin
- 50 per unit
- Calculation
- 50,000 ÷ 50
1,000 units per month, or 80,000 in revenue
Contribution margin is the number to watch. Raising price by 10 (to 90) lifts the margin to 60 and drops break-even to 834 units — a 17% reduction from a 12.5% price rise. Price changes move break-even far more than cost cutting usually can.
Classifying costs correctly
The analysis is only as good as the split, and several costs are commonly misfiled:
- Payment processing is variable —A percentage of each sale. Frequently lumped into fixed overhead, which understates variable cost and flatters break-even.
- Shipping is variable —Including packaging and any fulfilment fee per order.
- Salaried staff are fixed; hourly production staff are variable —The distinction is whether the cost rises with the next unit.
- Software is usually fixed, until it is per-seat or per-transaction —Usage-based pricing makes tooling a variable cost, and it scales faster than people plan for.
- Some costs are stepped —A second machine or a second warehouse is fixed within a range and jumps at a threshold. Break-even is discontinuous at those points, so model the range you are actually in.
- Your own time has a cost —Leaving founder time out makes break-even look reachable when it is not.
About
The Break-Even Calculator determines the exact number of units you must sell — and the revenue you must generate — before your business starts making a profit. Enter your fixed costs (rent, salaries, software subscriptions — costs that do not change with volume), variable cost per unit (materials, commissions — costs that scale with each sale), and selling price per unit. The tool instantly computes the break-even point, contribution margin, and if you enter expected sales volume, shows the margin of safety and projected profit or loss. Break-even analysis is a fundamental tool for pricing decisions, new product launches, and business planning.
How to use
- 1 Enter your total fixed costs for the period (e.g. monthly rent, salaries, subscriptions).
- 2 Enter the variable cost per unit — costs that change with each unit sold (materials, packaging, commissions).
- 3 Enter your selling price per unit.
- 4 Enter expected units sold to see the margin of safety and profit at that volume.
- 5 Review the break-even units, break-even revenue, and contribution margin in the results panel.
- What is the contribution margin and why does it matter?
- The contribution margin is the selling price minus the variable cost per unit: it is the amount each unit "contributes" toward covering fixed costs and then generating profit. A higher contribution margin means you break even faster. If the contribution margin is negative — meaning variable cost exceeds selling price — you lose money on every sale and cannot break even regardless of volume.
- What is the margin of safety?
- The margin of safety is the difference between your expected (or actual) sales volume and the break-even volume. It represents how far sales can fall before you start losing money. A margin of safety of 20% means sales can drop by 20% before you reach break-even. It is expressed both in units and as a percentage of expected volume.
- How do I use break-even analysis for pricing decisions?
- Break-even analysis shows you the minimum viable price given your cost structure. If the break-even volume at a certain price is higher than your realistic market demand, the price is too low. Raise the price to reduce the break-even point — but balance this against how price-sensitive your customers are. You can also use it in reverse: if you know the volume you can sell, work out the minimum price needed to be profitable.
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