Every business has a line where revenue finally catches up with what it costs to open the doors. This calculator finds that line in units and in dollars, using your own fixed costs, variable cost per unit and price, so you are not guessing whether today's sales pace actually gets you there.
Estimate for planning. Not financial advice.
Contribution margin is selling price minus variable cost per unit: the slice of each sale available to cover fixed costs. Break-even units equal fixed costs divided by that margin. Multiply by price to get break-even revenue. Enter a target profit and the calculator adds it to fixed costs before dividing, giving you the units needed to hit that number.
Start with the calculator's own defaults: a $30 price, a $12 variable cost and $20,000 in fixed costs. That works out to an $18 contribution margin (a 60% contribution ratio), which puts break-even at roughly 1,111 units, about $33,333 in revenue. Push fixed costs higher (a bigger lease, a new hire) and break-even units rise in direct proportion, since fixed costs sit on top of the division. Push variable cost up toward that $30 price instead, and the contribution margin shrinks fast: at $20 it is only $10, which lifts break-even to about 2,000 units on the same $20,000 fixed cost base. Let variable cost reach or pass the selling price and the math stops working altogether, which is why the calculator shows "price too low" instead of a number, rather than pretending a loss-making unit can somehow be sold enough times to break even. Selling price moving the other direction, upward, does the opposite: the contribution margin grows and break-even units drop.
| Input | Value |
|---|---|
| Selling price | $30 |
| Variable cost | $12 |
| Contribution margin | $18 (60%) |
| Fixed costs | $20,000 |
| Break-even units | ~1,111 |
| Break-even revenue | ~$33,333 |
These numbers assume steady costs and a steady price. Real businesses wobble; use this as a starting point, not a forecast.
Once you know your break-even number, the next questions are usually what the business is worth and how it pays the people running it. The Business Valuation Calculator turns earnings into a rough sale price range, and the Independent Contractor Calculator sorts out take-home pay for anyone billing hourly.
The portion of each sale remaining after you subtract variable costs per unit. This amount goes toward covering fixed costs first. Once fixed costs are covered, every additional unit at that margin is profit.
If variable cost exceeds selling price, each unit you sell increases your loss. Fixed costs become irrelevant because the loss compounds with volume rather than shrinking. Price must clear variable cost before break-even analysis means anything.
Three levers: cut fixed costs (renegotiate rent, reduce headcount), cut variable cost per unit (better supplier terms, more efficient production), or raise price. Raising price is usually the fastest move and the one most businesses are slowest to try.
No, it's a planning estimate.
