Break-Even Calculator

Calculate break-even sales volume, required revenue, fixed costs recovery, and business viability.

Break-Even Calculator

Calculate how many units you must sell, or how much revenue you must earn, before a product or business stops losing money. Below the break-even point every sale reduces a loss; above it, every sale adds profit.

Break-even formula

  • Contribution margin per unit: contribution margin = price - variable cost per unit
  • Break-even units: break-even units = fixed costs / contribution margin per unit
  • Break-even revenue: break-even revenue = fixed costs / contribution margin ratio, where the ratio is contribution margin / price

Fixed costs are expenses that do not change with sales volume: rent, subscriptions, insurance, salaries. Variable costs are incurred per unit sold: materials, shipping, packaging, transaction and platform fees. The contribution margin is what each sale contributes toward covering fixed costs; only after those are covered does it become profit.

Worked example

A seller has fixed costs of 2,400 per month. Each unit sells for 30 and carries 18 of variable cost.

  • Contribution margin: 30 - 18 = 12 per unit
  • Break-even units: 2,400 / 12 = 200 units per month
  • Break-even revenue: 200 x 30 = 6,000 (equivalently, 2,400 / 0.4 = 6,000, since the contribution margin ratio is 12 / 30 = 0.4)

Selling 250 units in that month earns 50 x 12 = 600 of profit, because only the 50 units beyond break-even contribute to profit.

When to use this calculator

  • Launching a product. Check whether the break-even volume is realistic for your audience before committing to stock and tooling.
  • Choosing a sales channel. Higher marketplace fees raise variable cost per unit, shrink the contribution margin, and push the break-even point up; compare channels side by side.
  • Pricing decisions. See how a small price increase lowers the number of units needed to break even, and how a discount raises it.
  • Adding fixed costs. Before signing up for a studio, tool, or subscription, work out how many extra sales it must generate to pay for itself.

Common mistakes

  • Classifying costs wrongly. Fees that scale with each sale are variable, not fixed, and belong in the per-unit figure.
  • Dividing fixed costs by price instead of by contribution margin, which understates the true break-even volume.
  • Leaving out your own pay. A business that only breaks even by valuing your time at zero has not really broken even.
  • Treating break-even as a one-off. Costs and prices drift, so the break-even point moves and is worth rechecking regularly.
  • Ignoring capacity. A break-even volume you cannot physically produce or fulfil is a signal to change the price or the cost structure, not a plan.

Related calculators

The pricing calculator helps set the price side of the equation, and the discount calculator shows how promotions change your contribution margin. The Etsy fee calculator and eBay fee calculator estimate the platform fees that belong in variable cost, while the inventory value calculator tracks the stock tied up while you climb toward break-even.

Frequently asked questions

How is the break-even point calculated?
Break-even units equal fixed costs divided by the contribution margin per unit, where contribution margin is the selling price minus the variable cost per unit. With fixed costs of 2,400, a price of 30, and variable costs of 18, the contribution margin is 12 and break-even is 200 units. Every unit sold beyond that point adds its full contribution margin to profit.
What is the difference between fixed and variable costs?
Fixed costs stay the same regardless of how much you sell, such as rent, insurance, salaries, and subscriptions. Variable costs are incurred with each unit sold, such as materials, shipping, packaging, and platform or payment fees. Classifying a per-sale fee as fixed, or vice versa, will make the break-even result wrong.
What is contribution margin?
Contribution margin is the selling price minus the variable cost of one unit, which is the amount each sale contributes toward covering fixed costs. Once total contributions cover fixed costs, the business breaks even, and each additional sale's contribution margin becomes profit. It can also be expressed as a ratio by dividing it by the price.
How do I calculate break-even in revenue instead of units?
Divide fixed costs by the contribution margin ratio, which is the contribution margin per unit divided by the price. In the example above the ratio is 12 / 30 = 0.4, so break-even revenue is 2,400 / 0.4 = 6,000. This form is useful when you sell many products and think in revenue terms rather than units.
How does a price change affect the break-even point?
Raising the price increases the contribution margin per unit, so fewer units are needed to cover fixed costs; discounting does the opposite. In the example, moving the price from 30 to 33 raises the contribution margin from 12 to 15 and cuts break-even from 200 units to 160. Small price changes can move the break-even volume substantially.
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