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Units · Revenue · Contribution Margin

Break-Even Calculator

Enter your fixed costs, price per unit, and variable cost per unit to find out exactly how many units you need to sell — and how much revenue you need to cover them — before the business starts generating profit.

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Rent, salaries, insurance, equipment — costs that don't change with sales volume

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Materials, direct labor, shipping per unit

Break-Even Point

167 units

$8,333 in revenue

Variable cost $20.00 Contribution margin 60.0%
Contribution margin / unit $30.00
Break-even units 167
Break-even revenue $8,333
Profit at 2× break-even volume $5,020
Fixed Total cost Revenue Break-even Profit zone Loss zone Units sold Revenue / Cost

How Break-Even Analysis Works

Break-even analysis works because costs divide cleanly into two categories: those that exist whether you sell one unit or ten thousand (fixed), and those that scale with every unit sold (variable). Revenue scales with volume too, and the break-even point is where the revenue line and total cost line intersect. Before that intersection, you are running a loss — fixed costs are only partially covered. After it, every additional unit generates profit equal to the contribution margin per unit with no further fixed-cost drag.

What makes break-even analysis useful in practice is not the number itself — it is the sensitivity analysis you can run around it. If you raise the price by 10%, what happens to break-even volume? If variable costs creep up 15% next quarter due to shipping rate increases, how many more units do you need to sell? Those questions are where the model earns its place in financial planning, and they are why contribution margin ratio matters more than the raw break-even unit count. Our profit margin calculator covers the complementary side of this math — once you are past break-even, what percentage of each sale flows to net profit.

Contribution Margin: The Core of Break-Even Math

Contribution margin per unit is the engine of break-even analysis. It is what each sold unit "contributes" to covering fixed costs before any of it becomes profit. If your contribution margin is $25 and your fixed costs are $10,000 per month, you need to sell exactly 400 units to break even — and each unit beyond that generates $25 in profit with no further fixed-cost burden. That 400-unit number tells you nothing useful without context; the $25 per unit and the fixed cost stack together are what reveal whether the business model is viable.

Payment processing costs are a frequently underestimated variable cost. A 2.9% + $0.30 Stripe fee on a $50 product adds $1.75 per transaction that reduces contribution margin. Across 1,000 monthly sales, that is $1,750 in fees that need to be built into the variable cost input rather than absorbed in the margin estimate. The same logic applies to marketplace fees — our Etsy fee calculator and Amazon FBA calculator show the per-unit fee load from those platforms, which slots directly into the variable cost side of break-even math.

Fixed Costs vs Variable Costs: What Goes Where

The biggest source of error in break-even calculations is misclassifying costs. Rent, salaries, insurance, software subscriptions, and loan payments belong in fixed costs — they exist independent of sales volume. Direct materials, per-unit labor, packaging, shipping, and payment processing fees belong in variable costs. Semi-variable costs — like a warehouse where the base rent is fixed but labor scales with throughput — should be split. The COGS calculator on this site covers the direct-materials-plus-labor side of variable cost accounting if you need a more detailed product cost breakdown. The key discipline is being honest: a cost that actually scales with volume should not be treated as fixed just because the check hits the same day each month.

Methodology note — May 2026:
  • • Break-even formula: Fixed Costs ÷ (Price − Variable Cost per Unit) = Units to break even
  • • Break-even revenue formula: Fixed Costs ÷ Contribution Margin Ratio = Revenue to break even
  • • Units result is rounded up to the nearest whole unit (ceiling function) — you cannot sell a fraction of a unit
  • • "Profit at 2× break-even" = (Break-even units × 2) × Contribution margin per unit − Fixed costs

Frequently Asked Questions

What is break-even analysis?

Break-even analysis tells you exactly how many units you need to sell — or how much revenue you need to generate — before the business stops losing money and starts making it. The break-even point is where total revenue equals total costs: fixed costs are fully covered, and every unit sold beyond that point adds pure profit. We built this calculator because the formula is simple but the inputs are where most early-stage decisions go wrong — what belongs in fixed costs, what belongs in variable costs, and how confident the contribution margin estimate really is.

How do you calculate the break-even point?

The formula has two steps. First, calculate the contribution margin per unit: subtract the variable cost per unit from the price per unit. Second, divide fixed costs by the contribution margin. If you sell a product at $50, your variable cost per unit is $20, and your monthly fixed costs are $5,000, the contribution margin is $30 per unit and the break-even is 167 units per month. Every unit sold beyond 167 generates $30 in profit. The revenue version of the break-even divides fixed costs by the contribution margin ratio (contribution margin ÷ price), which gives you the dollar value of sales needed rather than the unit count.

What is contribution margin?

Contribution margin is what remains from each sale after paying the variable costs directly tied to that sale — the amount each unit "contributes" to covering fixed costs and eventually generating profit. A product selling at $80 with $35 in variable costs (materials, direct labor, shipping, payment processing) has a $45 contribution margin and a 56.25% contribution margin ratio. That ratio is the lever that drives break-even math: the higher it is, the fewer units you need to cover fixed overhead, and the faster volume beyond break-even converts into actual profit.

What counts as a fixed cost vs a variable cost?

Fixed costs stay the same regardless of how many units you sell — rent, insurance, salaries, software subscriptions, equipment depreciation. Variable costs scale directly with sales volume — raw materials, direct labor per unit, packaging, shipping, payment processing fees. The line blurs in real businesses: a salesperson on pure commission is variable, one on salary plus commission is semi-variable, one on salary is fixed. For break-even purposes, the goal is to put costs where they actually belong rather than treating every expense as fixed. Misclassifying a large variable cost as fixed (or vice versa) can make your break-even appear reachable when the underlying unit economics do not support it.

What does "profit at 2× break-even volume" mean?

The "profit at 2× break-even volume" number in this calculator shows what your profit would be if you sell exactly twice as many units as the break-even requires. It is not a forecast — it is a quick check on how much operating leverage exists in the business model. If break-even is 200 units and profit at 400 units is $6,000 per month, each additional 100 units beyond break-even generates $3,000 in monthly profit (100 × $30 contribution margin). Low-margin businesses may show a small profit at 2× break-even, which signals they need very high volume to be meaningfully profitable.

What if my variable cost is higher than my price?

When variable cost per unit exceeds or equals the selling price, there is no break-even point — every unit sold increases losses rather than working toward covering fixed costs. The calculator shows an error in this state because a business where contribution margin is zero or negative cannot break even at any volume level. The fix is either raising the price, reducing variable costs, or reconsidering the product entirely. This situation is more common than it looks on paper in businesses that underestimate shipping and payment processing costs as variable inputs.

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