Break-Even Calculator

The calculator finds how many units you need to sell for revenue to cover all costs:

• Contribution margin per unit: price − variable cost
• Break-even units: fixed costs ÷ contribution margin, rounded up to a whole unit
• Break-even revenue: break-even units × price

With the defaults, $10,000 of fixed costs, a $50 price and a $30 variable cost leave $20 per unit towards fixed costs, so you break even at 500 units, or $25,000 of sales.

One detail: the units figure is rounded up, but the revenue figure uses the exact, unrounded number. At a $45 price, break-even is 666.67 units, shown as 667, while revenue shows $30,000 rather than 667 × $45 = $30,015. Both are right; the second is what you actually need to sell in whole units.

The answer depends on putting each cost in the right field:

• Fixed costs stay the same whatever you sell in the period: rent, salaries, insurance, software subscriptions, loan repayments. Enter the total for the period you are analysing, such as one month.
• Variable costs rise with each unit: materials or wholesale cost, packaging, shipping you pay, payment and marketplace fees, sales commission.

Percentage fees are easy to forget. A 3% payment fee on a $50 price is $1.50 per unit. Adding it to the variable cost moves the default from $30 to $31.50, cutting the contribution margin to $18.50 and raising break-even from 500 to 541 units.

Make sure the units and the fixed costs cover the same period. Monthly fixed costs give you monthly break-even units.

Because the contribution margin is the gap between price and variable cost, a small price change makes a large difference to it. With $10,000 of fixed costs and a $30 variable cost:

A 10% price cut, from $50 to $45, needs a third more units to break even. A $3 rise in variable cost at the $50 price has a similar effect: contribution falls to $17 and break-even rises to 589 units.

If the price is at or below the variable cost, every sale loses money and there is no break-even point. The calculator then shows a dash for units and revenue.

To find the units for a profit goal, add the profit you want to the fixed costs. For $6,000 of profit on top of the defaults, enter $16,000 as fixed costs: you need 800 units, or $40,000 of sales.

Once you have a sales forecast, the margin of safety tells you how far sales can fall before you lose money: (expected units − break-even units) ÷ expected units. If you expect to sell 700 units against a 500-unit break-even, sales can drop 28.57% before you make a loss. At 700 units the profit would be 700 × $20 − $10,000 = $4,000.