Finance

Break-even calculator

How many units to sell to cover your costs.

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Units to sell
Break-even revenue
Contribution margin / unit
Contribution margin ratio

The number every business plan must know

Before talking profit, one question: from how many sales do you stop losing money? Three inputs suffice — period fixed costs, unit variable cost and price — to get the break-even point in units, in revenue, and the contribution margin that drives it all.

  1. Add up your fixed costs

    Rent, salaries, insurance, software… everything due even without sales, over the chosen period (month or year).

  2. Cost the unit

    Variable cost (materials, commission, shipping) and net selling price.

  3. Read the threshold

    Units to sell and corresponding revenue: below you lose, above every sale becomes profit.

Three levers to lower the threshold

  • Cut fixed costs: every dollar of fixed cost removed saves several required sales.
  • Raise the price: double effect — more margin per sale and a lower threshold (if volume holds).
  • Squeeze the variable cost: supplier negotiation, packaging, logistics.

The threshold assumes constant price and costs — in reality, discounts and cost steps move it. Recompute at every offer change, and target a 20% safety margin above it.

Frequently asked questions

How is the break-even point computed?

Units to sell = fixed costs ÷ (selling price − unit variable cost). The denominator is the contribution margin: what each sale contributes to “soak up” fixed costs. With $5,000 fixed, a $30 price and $12 variable cost, you need 5,000 ÷ 18 = 278 units.

Fixed or variable: how do I sort costs?

Fixed: they fall due even at zero sales — rent, salaries, insurance, subscriptions. Variable: they follow each unit — raw materials, commissions, shipping, packaging. When in doubt, ask: “if I sell one more unit, does this cost rise?”

What if my price is below the variable cost?

Then every sale deepens the loss: no volume will save you. Raise the price, cut the variable cost or drop the product — the tool flags it immediately.

What is the contribution margin ratio for?

It tells you the share of each sales dollar available to cover fixed costs: a 60% ratio means the break-even revenue equals fixed costs ÷ 0.60. The higher it is, the faster you reach profitability.