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Break-Even Calculator Guide
Break-even is the point where revenue exactly covers costs — the moment you stop losing money and start making it. This calculator finds it in units and in revenue, and shows what it takes to hit a profit target.
Break-even units = Fixed costs ÷ (Price − Variable cost per unit)
$50,000 fixed costs, a $25 price and $15 variable cost means $10 per unit toward fixed costs — so you need 5,000 units.
Contribution Margin Is the Real Engine
The bit in the brackets — price minus variable cost — is your contribution margin. It's what each sale contributes toward covering fixed costs, and once fixed costs are covered, every further unit's contribution is pure profit.
That's why break-even feels like a cliff edge. Sell 4,999 units and you lose $10. Sell 5,001 and you make $10. The whole business turns on a handful of sales around that line.
Fixed vs Variable — Get This Right or the Answer Is Meaningless
Fixed costs don't move with volume: rent, salaried staff, insurance, software, loan payments. You pay them if you sell nothing.
Variable costs occur per sale: materials, packaging, shipping, payment processing, commission, per-unit labour.
Most misclassification runs one way — people treat variable costs as fixed and get a break-even that's far too optimistic. Payment processing fees are the classic: they're 2–3% of every single sale, and they belong in variable.
Some costs are genuinely both. A salesperson on base plus commission is part fixed, part variable. Split them rather than forcing the whole thing into one bucket.
Price Beats Volume, Every Time
Here's the leverage. Raise the price from $25 to $28 and contribution margin goes from $10 to $13 — break-even drops from 5,000 units to 3,847. A 12% price rise cut the required volume by 23%.
Now try cutting variable cost from $15 to $12: the same $13 margin, the same result. Both beat "sell more" as a strategy, because selling more doesn't change the arithmetic — it just runs harder at it.
Break-Even Isn't the Goal
It's the floor. Nobody starts a business to break even. Use the target profit field to find the volume that actually pays you — and if that number looks unreachable, the problem is the model, not the effort.
What This Doesn't Model
It assumes a constant price and constant variable cost across every unit. In reality, discounts, bulk pricing, and volume savings all bend those lines. It's a planning tool and a good one, but check it against reality before you bet the company on it.
Set your price with the markup calculator first.
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