Break-Even Calculator
Enter your fixed costs, your selling price and your variable cost per unit. You get the number of units you must sell to cover costs, the revenue that represents, and the profit at a volume you choose.
Break-even units = fixed costs ÷ (price − variable cost per unit), rounded up because you cannot sell a fraction of a unit. Contribution margin is what each sale leaves to absorb fixed costs. Taxes, one-off capital purchases and financing costs are excluded — add them to fixed costs if you want a fully loaded figure.
Frequently asked questions
What is the break-even formula?
Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The bottom part of that fraction is the contribution margin: what each sale leaves behind to pay off fixed costs. Fixed costs are $5,000 a month, you sell at $20, materials and shipping cost $8, so each unit contributes $12 → 5,000 ÷ 12 = 416.7, meaning you break even on the 417th unit sold.
What counts as a fixed cost and what counts as a variable cost?
Fixed costs do not change when you sell one more unit: rent, salaries, insurance, software subscriptions, loan payments. Variable costs rise with each unit: materials, packaging, payment processing fees, shipping, hourly labour directly tied to production. The awkward middle is semi-variable costs like electricity or a freelancer on retainer — the usual approach is to fix the base portion and treat the usage-driven part as variable.
Why is my break-even point higher than I expected?
Two usual culprits. First, a forgotten fixed cost — payment fees, returns, marketing spend, your own salary. Second, a contribution margin that is thinner than assumed once discounts, shipping subsidies and card fees are counted. If your margin per unit is $12 and you offer a 20% discount on a $20 product, margin drops to $8 and break-even jumps from 417 units to 625 — a 50% increase in sales needed.
How do I lower my break-even point?
Three levers, in order of speed: raise price (a 10% price rise on a 60% margin product can cut break-even by a fifth), cut fixed costs (moving to a cheaper space or annual billing on software), or improve the margin by renegotiating supplies or bundling. Raising volume never lowers break-even — it only gets you there faster, which is why it is the wrong answer when cash is tight.