Calculate how many units you need to sell to cover all costs, plus units needed for a target profit.
Break-even analysis uses the standard Cost-Volume-Profit model: Fixed Costs ÷ Contribution Margin per Unit. This assumes linear cost/revenue behavior, constant selling price, and no mixed costs.
Total cost starts at the fixed-cost level and rises by the variable cost of every extra unit; revenue starts at zero and rises by the selling price. The wedge between them left of the crossing is the loss you absorb; the wedge to the right is profit. The steeper the gap, the faster you get there — that steepness is exactly the contribution margin.
Maya runs a small ceramics studio selling planters wholesale. She wants to know how many units she must ship in a year before the studio pays for itself, and how many to hit a $40,000 profit goal.
Calculate your break-even point: how many units to sell to cover costs. See contribution margin, daily sales needed. Free for small business.
The Break-Even Calculator determines how many units you need to sell to cover all your business costs — the point where total revenue equals total costs and you neither make nor lose money. It calculates the break-even point in units, revenue, and time (daily, weekly, monthly), plus the contribution margin per unit and as a ratio. You can also set a target profit to see how many units you need to sell to reach a specific income goal.
This calculator is for small business owners, entrepreneurs, product designers, e-commerce sellers, and anyone planning to launch a product or service. Whether you are pricing a new product, evaluating a business idea, or setting sales targets for your team, knowing your break-even point is essential. It is particularly useful for dropshippers, manufacturers, and service businesses with clear fixed and variable cost structures.
Enter three numbers: (1) Fixed Costs — expenses that do not change with sales volume (rent, salaries, insurance, software subscriptions). (2) Selling Price per Unit — what you charge customers for one unit. (3) Variable Cost per Unit — costs that scale with each sale (materials, shipping, payment processing fees, packaging). The calculator computes: Contribution Margin = Price - Variable Cost; Break-Even Units = Fixed Costs / Contribution Margin; Break-Even Revenue = Break-Even Units × Price; and breaks it down into daily, weekly, and monthly sales targets.
A small business has $10,000/month in fixed costs (rent, software, base salary). They sell a product for $50 with $20 in variable costs (materials, shipping, fees). • Contribution Margin: $50 - $20 = $30 per unit • Contribution Margin Ratio: $30 / $50 = 60% • Break-Even Point: $10,000 / $30 = 334 units/month • Break-Even Revenue: 334 × $50 = $16,700/month • Daily target: ~11 units/day (assuming 30 days) To earn $5,000/month profit: ($10,000 + $5,000) / $30 = 500 units/month
The break-even point is the number of units you must sell for total revenue to equal total costs. At this point, your business neither makes a profit nor incurs a loss. It is calculated as: Break-Even Units = Fixed Costs / (Selling Price - Variable Cost per Unit). Below this point, you lose money; above it, you profit.
Contribution margin is the amount each unit sale contributes toward covering fixed costs and generating profit. It is calculated as: Selling Price per Unit minus Variable Cost per Unit. For example, if you sell a product for $50 and variable costs are $20, your contribution margin is $30 per unit. The contribution margin ratio (contribution margin divided by price) shows what percentage of each sales dollar is available to cover fixed costs.
Fixed costs do not change with sales volume — they include rent, salaries, insurance, software subscriptions, and loan payments. Variable costs scale directly with each unit sold — they include raw materials, production labor, shipping, packaging, and payment processing fees. Semi-variable costs (like utilities or hourly labor) have both fixed and variable components.
For service businesses, your "unit" is one hour of service or one project. Fixed costs include rent, software, and base salary. Variable costs include travel, materials, and subcontractor fees. If you charge $100/hour with $20/hour in variable costs, your contribution margin is $80/hour. With $8,000/month fixed costs, your break-even is 100 billable hours per month.
A contribution margin ratio of 40% or higher is generally considered healthy for most industries. Software and digital products often achieve 80-90% (low variable costs). Physical products typically have 30-50%. Restaurants and retail often operate at 20-40%. A ratio below 20% means small changes in volume or pricing can quickly push you into a loss.
Break-even analysis reveals whether your current pricing can cover costs at realistic sales volumes. If your break-even point is 10,000 units/month but you can only sell 3,000, you need to either raise prices, reduce variable costs, or lower fixed costs. It also helps evaluate discounts: a 10% price cut increases your break-even point by 25-50% depending on your margin.
Yes. For multiple products, calculate a weighted average contribution margin based on your sales mix. For example, if Product A (CM $30) is 60% of sales and Product B (CM $50) is 40%, your weighted CM is $38. Divide total fixed costs by $38 to find the break-even point in total units, then allocate by sales mix.
Break-even analysis assumes linear cost and revenue behavior (constant price and variable cost per unit). In reality, bulk discounts, capacity constraints, and stepped fixed costs (like hiring a new employee) create non-linear behavior. Use break-even as a planning baseline, not a precise forecast. It also does not account for cash flow timing or inventory carrying costs.
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