The break-even calculator answers the first question of any business plan: how much do we have to sell before we stop losing money? Enter fixed costs, price and variable cost per unit.
The formula
Break-even units = Fixed costs ÷ (Price − Variable cost). The bracket is the contribution margin — what each sale contributes toward fixed costs after paying for itself. If variable cost meets or exceeds price, no volume ever breaks even; the model, not the marketing, is broken.
Worked example
Fixed costs $20,000/month, price $50, variable cost $20: contribution margin $30, so break-even = 20,000 ÷ 30 = 667 units — that’s $33,350 of monthly revenue. Selling 800 units? The 133 units past break-even each drop $30 straight to profit.
How to read the result
Break-even is a floor, not a target — a business hovering at break-even has no cushion for a slow month. Watch how the number moves: a 10% price rise (to $55) cuts break-even to 571 units, while a 10% cost cut only reaches 606. Price changes usually beat cost cuts, which is why the margin and markup tools sit next to this one.
What are fixed vs variable costs?
Fixed costs stay the same regardless of volume — rent, salaries, insurance. Variable costs scale with each unit — materials, shipping, payment fees.
What is contribution margin?
Price minus variable cost per unit: what each sale contributes toward covering fixed costs, and after break-even, toward profit.
How can I lower my break-even point?
Three levers: raise price, cut variable cost, or cut fixed costs. Price usually moves the number most — test it in the calculator.
Does break-even include my own salary?
It should. Founders who exclude their salary are subsidising the business and hiding its true break-even.