Break-Even Calculator – Units and Revenue to Cover Costs
Find out how many units you need to sell to cover all your costs, the revenue at that point and how many sales a target profit requires.
Break-even units = fixed costs ÷ (price − variable cost per unit). With $5,000 of monthly fixed costs, a $25 price and a $10 variable cost, each sale contributes $15, so you need 334 sales a month (about $8,350 of revenue) to break even.
How to use Break-Even Calculator
- Enter your fixed costs for the period (for example, per month).
- Enter the selling price per unit.
- Enter the variable cost per unit: materials, packaging, shipping, payment fees.
- Optionally enter a target profit.
- Read the break-even units, break-even revenue and the profit table.
The break-even formula
The break-even point is where total revenue equals total costs: no profit, no loss. Every unit you sell contributes its contribution margin — price minus variable cost — towards paying the fixed costs. Once those are covered, each further sale is profit.
Break-even units = fixed costs ÷ (price − variable cost per unit)
Break-even revenue = break-even units × price
Fixed vs variable costs
| Fixed costs (per period) | Variable costs (per unit) |
|---|---|
| Rent, salaries, insurance | Materials and ingredients |
| Software subscriptions, loan payments | Packaging and shipping |
| Website and accounting fees | Card and marketplace fees, commissions |
Fixed costs stay the same whether you sell one unit or a thousand; variable costs grow with every sale. Sort your costs carefully — the result is only as good as this split.
Example
A small online shop has $5,000 of fixed costs a month, sells a product for $25 and spends $10 per order on stock, packaging and fees. The contribution margin is $15, so it needs 5,000 ÷ 15 = 333.3, rounded up to 334 orders a month to break even. For a profit target of $3,000, it needs (5,000 + 3,000) ÷ 15 = 534 orders.
How to lower your break-even point
- Raise the price — even a small increase lifts the contribution margin of every unit.
- Cut variable costs — cheaper shipping or suppliers have the same effect.
- Reduce fixed costs — every dollar saved is one less dollar to recover.
- Sell higher-margin products — a better sales mix lowers the average break-even.
Limits of a break-even analysis
It assumes a constant price and constant costs per unit, and that everything produced is sold. Real businesses face discounts, volume pricing and seasons, so treat the result as a planning guide and review it regularly. Check per-product profitability with the Profit Margin Calculator and price your products with the Markup Calculator.
You may also find these free tools useful: Compound Interest Calculator, Fuel Cost Calculator and Electricity Cost Calculator.
Frequently asked questions
How do I calculate the break-even point?
Divide fixed costs by the contribution margin per unit (price minus variable cost). The result is the number of units you must sell to cover all costs.
What is contribution margin?
The selling price minus the variable cost of one unit. It is the amount each sale contributes to covering fixed costs and then to profit.
How do I calculate break-even revenue?
Multiply the break-even units by the price, or divide fixed costs by the contribution margin ratio.
What if the price is lower than the variable cost?
Then every sale loses money and you can never break even. Raise the price or lower variable costs first.
Should break-even be calculated monthly or yearly?
Either works, as long as fixed costs and sales cover the same period. Monthly figures are easier to track for most small businesses.
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