Break-Even Calculator

Divide your fixed costs by the contribution per unit, which is the selling price minus the variable cost of one unit. With $3,000 of fixed costs a month, a $25.00 price and $10.00 of variable cost, each sale contributes $15.00, so you break even at $3,000 ÷ $15.00 = 200 units a month.

Contribution margin is what each sale leaves over after its own variable costs: price minus variable cost per unit. That money goes toward fixed costs first, then becomes profit. As a ratio it is contribution ÷ price — in the example below, $23.50 on a $50.00 price is a 47% contribution margin ratio.

They describe the same point. Units tell you how many sales to make; revenue (fixed costs ÷ contribution margin ratio) tells you how much to sell in money, which is handier when you sell many products at different prices. Units are rounded up because you can't sell part of one, so the revenue for whole units ($11,950.00) is slightly above the exact break-even revenue ($11,914.89).

Add them as "% of price" rather than a fixed amount, because they grow when you raise the price. A 10% fee takes $2.00 of a $20.00 sale but $2.40 of a $24.00 one. With $8.00 of other costs and $1,000 fixed, that is 74 units to break even at $24.00, against 63 if you ignored the fee.

Then you can't break even, however much you sell — every sale adds to the loss instead of paying off fixed costs. The calculator shows the lowest price that covers variable costs; you need to charge more than that, or bring variable costs down.

It is how far sales can fall before you make a loss: expected sales minus break-even sales, in units, money or as a percentage of expected sales. Selling 400 units against a break-even of 238.3 gives a margin of safety of 161.7 units, or 40.4%.

Operating leverage is total contribution ÷ profit at your expected sales. It tells you how strongly profit reacts to a change in sales: at 2.47×, a 10% rise or fall in sales moves profit by about 24.7%. It is high close to break-even and falls as sales grow past it. It is the same as 1 ÷ the margin of safety percentage.

Only roughly. For several products, use a weighted average price and variable cost based on your expected sales mix, or work in revenue with an average contribution margin ratio. The answer then holds only if the mix stays the same — selling more of a low-margin product moves the break-even point up.

Add the target profit to your fixed costs and divide by the contribution per unit: (fixed costs + target profit) ÷ contribution. In the example below, ($5,600 + $2,000) ÷ $23.50 = 323.4, so you need 324 units, or $16,170 in sales, a month. Enter a target profit and the calculator shows both.

Fixed costs stay the same however much you sell in the period — rent, salaries, insurance, software subscriptions. Variable costs rise with every unit sold — materials, per-unit labor, packaging, shipping and payment or marketplace fees. You can enter each fixed cost as monthly or yearly; the calculator converts them to the period you pick (a year is 12 months).

Often more than you'd expect, because the whole price increase goes to contribution. In the example below, raising the price 10% from $50.00 to $55.00 lifts contribution from $23.50 to $28.35 a unit and cuts break-even from 239 to 198 units. The what-if table shows break-even units for price and cost changes of up to 20% either way.

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