Break Even Calculator

The break-even point

Break-even is the sales volume at which total revenue exactly covers total costs. Below it you're losing money; above it, every additional sale contributes profit.

break-even units = fixed costs ÷ (price − variable cost per unit)

The denominator is the contribution margin — what each sale contributes toward covering fixed costs once its own direct costs are paid.

Fixed versus variable costs

• Fixed — you pay them whatever happens. Rent, salaries, software subscriptions, insurance, equipment leases.
• Variable — they scale with each unit sold. Materials, manufacturing, shipping, payment fees, commission.

Some costs are genuinely mixed. A warehouse contract with a base fee plus a per-pallet charge is both; split it rather than forcing it into one bucket.

Thin margins are fragile

The lower the contribution margin, the more violently the break-even point moves when anything changes. With 8,000 in fixed costs:

A 7 increase in unit cost adds 103 units to the target. A 5 price rise claws most of it back. This is why margin discipline matters more than volume in small businesses.

Using it as a decision tool

Break-even analysis is most useful before committing to something:

• Hiring — how many extra sales does this salary require?
• Pricing — what does a 10% discount do to the volume you need?
• New products — is the required volume plausible given your reach?

If the answer requires selling more than your market realistically supports, the plan needs changing before the money is spent, not after.