Compute the units and revenue needed to break even (or hit a target profit) given your cost structure.
Break-even units
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Break-even revenue
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Contribution margin
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Contribution margin %
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The sales number where you stop losing money
Break-even analysis answers the most basic question a business owner has: how much do I need to sell before I cover my costs? Below that point you lose money on the venture as a whole; above it, each additional sale is profit. The engine behind the answer is the contribution margin, the slice of each sale left over after the variable cost of producing that one unit. This tool takes your fixed costs, price, and per-unit variable cost, and returns the units and revenue you need to break even, plus the margin on every sale.
Fixed, variable, and the margin in between
Costs split into two buckets. Fixed costs, like rent, salaries, and software subscriptions, stay the same whether you sell ten units or ten thousand. Variable costs, like materials, payment processing, and shipping, rise with each unit sold. The contribution margin is price minus variable cost per unit, and it represents the dollars each sale contributes first toward paying down those fixed costs and, once they are covered, toward profit. Break-even units are simply fixed costs divided by that per-unit contribution margin.
A $100 product with $40 of variable cost
Suppose you carry $50,000 in fixed costs, sell your product for $100, and spend $40 per unit on materials and fulfillment. Your contribution margin is $100 minus $40, or $60 per unit, which is a 60% contribution margin. Dividing $50,000 of fixed costs by the $60 margin gives 833.33 units, and since you cannot sell a third of a unit the tool rounds up to 834 units. At $100 each, that is $83,400 in break-even revenue. Sell unit number 835 and the full $60 margin on it drops to the bottom line as profit.
| Item | Value |
|---|---|
| Fixed costs | $50,000 |
| Price per unit | $100 |
| Variable cost per unit | $40 |
| Contribution margin | $60 (60%) |
| Break-even units | 834 |
| Break-even revenue | $83,400 |
Targeting a profit, not just survival
Breaking even is the floor, not the goal. To find the volume that hits a profit target, you treat the target as if it were an additional fixed cost: add it to fixed costs before dividing by the contribution margin. The calculator has a target-profit field that does exactly this. If you wanted $30,000 of profit on the example above, you would divide $80,000 by the $60 margin and need about 1,334 units. The same lever shows why margin matters so much. Raising the price or trimming variable cost widens the margin and lowers every one of these targets at once.
A caution that trips up new founders: this is a contribution-margin model, so it treats price and variable cost per unit as constant at every volume. Real businesses rarely work that way. Bulk discounts shrink your price as you scale, supplier volume breaks lower your variable cost, and crossing a capacity ceiling, hiring another shift or leasing more space, suddenly bumps fixed costs to a new plateau. The clean straight lines in the chart become a series of steps. Use the break-even figure as a planning anchor, then re-run it whenever your cost structure jumps to a new level. The neighboring margin-of-safety idea is the natural follow-up: how far current sales sit above break-even is your buffer against a downturn.
What if my variable cost is higher than my price?
Then there is no break-even point, and the calculator says so. A negative contribution margin means every unit you sell deepens the loss, so selling more cannot dig you out, it only makes things worse. The fix is structural, not volume-based: raise the price, cut the per-unit cost, or discontinue the product. This is a common and painful discovery for businesses that priced off competitors without mapping their own unit economics first.
Should I include my own salary in fixed costs?
For an honest picture, yes. If you are running the business full time, the income you need to live on is a real cost of operating, even if you do not formally pay yourself a wage. Leaving your salary out produces a flattering break-even that the business cannot actually sustain. Many owners run two versions, one bare-bones break-even covering only out-of-pocket fixed costs, and one that folds in a market-rate salary for themselves, which is the number that tells you whether the business truly stands on its own.