Break-Even Calculator
The question every new product, stall, and side business eventually faces: how many do I have to sell before I stop losing money? Enter your fixed costs, the price you charge per unit, and the variable cost of each unit — the calculator returns the break-even unit count, the revenue it represents, and the contribution margin doing the work. Below the form: what the break-even number is actually for, why price moves it harder than any other lever, and where the tidy formula stops matching a real business.
Break-even point
Example: 12,000 fixed costs at a 25 price and 10 variable cost break even at 800 units.
The break-even formula
Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The bracketed term is the contribution margin: with a 25 price and 10 of variable cost, each unit contributes 15 toward the 12,000 of fixed costs, so break-even lands at 800 units — 20,000 of revenue. These figures are computed at build time by the same tested engine behind the form, so the copy can never drift from the calculator.
A floor, not a goal
Break-even answers one narrow question: at what volume does the business stop losing money? It says nothing about whether the business is worth running. Selling exactly 800 units in the example earns precisely zero — no pay beyond whatever salary already sits inside the fixed costs, no return on the cash tied up, nothing for the risk. The number's best use comes before launch, as a plausibility screen: enter honest costs and stare at the unit count. If a weekend-market stall needs 800 sales a month to break even and the foot traffic supports a fraction of that, the model fails on paper — the cheapest possible place to fail. So treat break-even as a floor to clear early, and measure the business by how far above it you are; that distance is the margin of safety, covered below.
The contribution-margin mistake
The classic error is stuffing a share of fixed costs into the per-unit cost ("each unit really costs 18 once you count rent") and then dividing fixed costs by the shrunken margin — which counts the rent twice and inflates the break-even point. Keep the two families strictly apart: the variable-cost field takes only costs that occur because a unit was made and sold; everything that arrives regardless belongs in fixed costs. If you're unsure which side a cost belongs on, ask what happens to it in a month with zero sales.
Three levers, one point
Every way to lower a break-even point is visible in the formula: raise the price, reduce the variable cost, or cut fixed costs. The first two widen the contribution margin, and small widenings compound — which you can watch live by nudging the price field. Once you're past break-even, each additional sale drops its full contribution margin through to profit; the profit calculator picks up the story from there, and the margin calculator shows what each individual sale earns.
Raise the price, or chase volume?
The levers are not equal, and a worked comparison shows why. Start from the example: 12,000 fixed costs, a 25 price, 10 variable cost — break-even at 800 units. Raise the price by 8% to 27 and the contribution margin goes from 15 to 17. The whole 2 lands on the margin, so the 8% price change becomes a 13.33% margin change — and break-even falls to 706 units (705.88 raw; you can't sell a fraction, so the display rounds up), 11.76% fewer than before.
Run it the other way and the same leverage turns hostile. Cut the price by 10% to 22.5 to chase volume: the margin shrinks to 12.5 and break-even climbs to 960 units — 20% more sales just to get back to zero. A discount campaign that won't plausibly lift volume by more than 20% lowers profit while feeling busier. The thinner the contribution margin, the more violent this arithmetic becomes — which is why high-margin software can discount casually while thin-margin retail agonises over a few percent.
Margin of safety: distance from the floor
Once you trade above break-even, the decision-relevant number is how far above. Margin of safety is the gap between actual sales and break-even sales, taken as a share of actual sales. Say the workshop is doing 25,000 of monthly revenue against the 20,000 break-even figure: the cushion is 5,000 of revenue, a 20% margin of safety — sales can fall 20% before the business dips back underwater. That's the number to reach for when a landlord floats a rent increase or a large customer wobbles, because it turns "how are sales?" into "how much bad news can we absorb?"
Where the tidy model bends
Fixed costs are stepwise, not flat. The 12,000 holds only while current capacity does; the moment growth forces a second machine, a larger space, or another hire, the fixed-cost line jumps as a step. Push it to 18,000 and break-even leaps from 800 to 1,200 units — a business can break even, grow, and find itself back underneath on the far side of a hiring decision. Recompute at each step rather than extrapolating across one.
One product, one margin. The formula assumes a single contribution margin. Sell several products and "the" margin is really a weighted average that moves with the sales mix: if customers drift toward the low-margin line, break-even rises with no change to any price or cost sheet. Run the calculation per product, or accept that a blended answer is only as stable as the mix behind it.
And break-even is counted in units, not time. 800 units says nothing about whether they take a month or a year to sell, while rent and salaries leave on the calendar. A business can be comfortably above break-even on annual arithmetic and still fail from one slow quarter — break-even is a viability check, not a cash-flow forecast.
Frequently asked questions
What is the difference between fixed and variable costs?
Fixed costs arrive whether or not you sell anything: rent, salaries, insurance, software subscriptions. Variable costs scale with each unit: materials, packaging, payment fees, per-order shipping. The split matters because only variable costs belong in the per-unit figure — fixed costs are what the units collectively have to pay off.
What is a contribution margin?
Price per unit minus variable cost per unit — what each sale contributes toward fixed costs before any of them are covered. At a 25 price and 10 variable cost, each unit contributes 15, which is a 60% contribution ratio.
Why does the calculator reject a price at or below the variable cost?
Because break-even would never arrive: if each sale contributes nothing (or loses money), selling more only digs deeper. Rather than reporting an infinite unit count, the calculator tells you the price has to exceed the variable cost first.
How do I get break-even in revenue instead of units?
Two equivalent routes: multiply the break-even units by the price, or divide fixed costs by the contribution-margin ratio. In the example, 800 units × 25 = 20,000, the same as 12,000 ÷ 60%.
Can I build a profit target into the calculation?
Yes — treat the target like an extra fixed cost. To find the units that cover fixed costs and earn a chosen profit on top, add that profit to the fixed-costs field: the formula (fixed costs + target) ÷ contribution margin drops straight out of the same arithmetic.
What is a margin of safety?
How far current sales sit above the break-even point, as a share of current sales. At 25,000 of monthly revenue against 20,000 of break-even revenue, the cushion is 5,000 — a 20% margin of safety, meaning sales can fall 20% before losses begin.
Cost and price figures never leave your browser. The formula is a tested, typed function with explicit domain checks — details on the methodology page.