Tool
Break-Even Calculator
How many units must you sell to cover fixed costs — and hit a profit target? Enter your numbers and find out.
Results
- Contribution margin / unit
- $20
- Contribution margin ratio
- 40.0%
- Break-even units / month
- 500
- Break-even revenue / month
- $25,000
Contribution margin = price − variable cost. Break-even units = (fixed costs + target profit) ÷ contribution margin.
This calculator provides directional estimates for informational purposes only and is not tax, legal, or financial advice. Results depend on the inputs you provide. For advice specific to your situation, book a Discovery Meet.
What this calculator does
This tool finds the point where your sales exactly cover your costs — and how many units (and how much revenue) it takes to get there. Enter your fixed costs, price per unit, and variable cost per unit, and it returns your contribution margin, your break-even point, and what it takes to hit a profit target. It is built for owners deciding whether a price, a product line, or a new hire actually pencils out.
How it works
Every unit you sell contributes something toward covering your fixed costs. That something is the contribution margin: price minus variable cost per unit.
Once total contribution margin equals your fixed costs, you break even. Beyond that point, each additional unit's contribution margin is profit. The formula: break-even units = (fixed costs + target profit) ÷ contribution margin.
A worked example
If your fixed costs are $10,000/month, you sell at $50 a unit, and each unit costs you $30 in variable cost:
Contribution margin = $50 − $30 = $20 per unit
Break-even units = $10,000 ÷ $20 = 500 units/month
Break-even revenue = 500 × $50 = $25,000/month
Sell fewer than 500 units and you lose money that month; sell more and the rest flows to profit. Want a $5,000 monthly profit? You'd need ($10,000 + $5,000) ÷ $20 = 750 units.
How to read your result
Your break-even point is a floor, not a goal. The lower it is relative to your normal sales volume, the more cushion you have when a slow month hits. If break-even is uncomfortably close to your typical sales, you have three levers: raise price, cut variable cost per unit, or reduce fixed overhead. The contribution-margin ratio also tells you how scalable the business is — a high ratio means each extra sale drops a lot to the bottom line.
Common mistakes
- ·Misclassifying costs. Rent and salaried staff are fixed; materials, shipping, and hourly labor that scale with volume are variable. Putting a cost in the wrong bucket throws off the whole calculation.
- ·Forgetting your own time. If you are not paying yourself a market wage, your real break-even is higher than the math shows.
- ·Treating it as one-and-done. Prices, costs, and overhead drift. Re-run it whenever they change.
Frequently asked questions
What is contribution margin?+
It's the money left from each sale after variable costs, available to cover fixed costs and then become profit. Price minus variable cost per unit. It's the single most important number in a break-even analysis.
What's the difference between fixed and variable costs?+
Fixed costs stay roughly the same regardless of how much you sell (rent, insurance, salaried staff). Variable costs rise and fall with volume (materials, packaging, payment processing, hourly labor tied to production).
How do I lower my break-even point?+
Three levers: increase your price, reduce your variable cost per unit (better sourcing, less waste), or cut fixed overhead. Even small changes to contribution margin move the break-even point significantly.
Does this include taxes?+
No — this is a pre-tax operating break-even. It tells you when operations cover their own costs. Tax planning is a separate layer a CPA can model on top of it.
Want a real answer, not just a calculator?
A calculator gives you a directional number. A free Discovery Meet gives you a CPA who reviews your actual books, structure, and goals.
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