Money
Break-even
Find how many units you must sell to cover costs, and the revenue at that point.
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Break-even units
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- Break-even revenue-
- Contribution margin per unit-
Simple model: assumes constant price and unit cost, and that every unit made is sold.
How to use this calculator
1. Enter your total fixed costs. 2. Enter the selling price and variable cost per unit. 3. Read the units and revenue needed to break even.
Worked example
With $10,000 in fixed costs, a $50 price, and a $30 variable cost, each unit contributes $20.00, so you break even at 500 units and $25,000 in revenue.
How the math works
Contribution margin = price - variable cost per unit. Break-even units = fixed costs / contribution margin, rounded up. Break-even revenue = break-even units x price. Price must exceed variable cost, or you never break even.
What is the break-even point?
The sales level where total revenue exactly covers total costs: no profit, no loss. Every unit past it earns the contribution margin as profit.
What is contribution margin?
Price minus variable cost per unit: the cash each sale contributes toward fixed costs. Here, $50 - $30 = $20.00 per unit.
What if variable cost is higher than price?
Then each sale loses money and you never break even: the calculator shows no result until price exceeds variable cost.
How do fixed costs affect break-even?
Directly: double the fixed costs and you must sell twice as many units, since each unit contributes the same margin.
What is break-even revenue?
Break-even units times price: the sales dollars at the no-profit-no-loss point. Here, 500 x $50 = $25,000.
Does this include taxes and profit targets?
No. This is a simple pre-tax model. To target a profit, add the target to fixed costs before dividing.