Calculate your break-even point in units and revenue. Find how many sales you need to cover fixed and variable costs.
Break-Even Point Calculator
Rent, salaries, software, subscriptions
COGS, shipping, packaging
Break-Even Units
Break-Even Revenue
Contribution Margin
CM Ratio
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Break-Even Analysis: How to Calculate It and Why It Matters
The break-even point is the exact number of units you must sell — or revenue you must generate — to cover all costs with zero profit or loss. Every unit sold above break-even generates pure profit; every unit below means you're losing money.
Break-Even Formulas
Break-Even Units = Fixed Costs / Contribution Margin per Unit
Contribution Margin = Selling Price − Variable Cost per Unit
Break-Even Revenue = Fixed Costs / Contribution Margin Ratio
CM Ratio = Contribution Margin / Selling Price × 100
Variable costs: Scale with units sold — raw materials, packaging, shipping, payment processing fees, sales commissions
Using Break-Even for Pricing Decisions
If your break-even is 200 units/month at $50/unit, and your market can realistically support 150 units, you have a pricing problem — not a sales problem. Consider raising price (increasing contribution margin), reducing fixed costs, or reducing variable costs to lower the break-even threshold.
Frequently Asked Questions
Contribution margin is the amount each unit sold contributes toward covering fixed costs and generating profit. CM = Selling Price − Variable Cost. If you sell a product for $50 with $20 variable cost, the CM is $30. Every sale contributes $30 toward the $5,000 fixed cost. Break-even = $5,000 / $30 = 167 units.
Three levers: (1) Reduce fixed costs — cut unnecessary subscriptions, negotiate rent, use contractors instead of full-time hires. (2) Increase price — even a 10% price increase can dramatically lower break-even if demand doesn't fall proportionally. (3) Reduce variable costs — negotiate with suppliers, find cheaper shipping, reduce packaging costs.
Margin of safety = (Current Sales − Break-Even Sales) / Current Sales × 100. If your break-even is 167 units and you're selling 250, your margin of safety is (250-167)/250 = 33%. This means sales could drop 33% before you start losing money. A higher margin of safety = more financial resilience.
Yes — adapt it slightly. For service businesses, 'units' are often billable hours or client engagements. Variable cost per unit = direct labor + materials for that project. Fixed costs = all overhead (office, software, admin salaries). Break-even tells you how many hours/projects you need to bill each month to be profitable.