Every business has a number: the sales volume where revenue finally covers costs. Below it you lose money on every month; above it, each sale is profit. Finding that number takes three inputs and one division.

The three inputs

  • Fixed costs — what you pay regardless of sales: rent, salaries, software, insurance. Monthly or yearly, but be consistent.
  • Price per unit — what one sale brings in.
  • Variable cost per unit — what one sale costs you: materials, shipping, payment fees, per-unit labor.

Contribution margin: the key idea

Each sale contributes price minus variable cost toward your fixed costs. Sell at $100 with $60 variable cost, and each unit contributes $40. That's the contribution margin — and the whole calculation follows from it:

Break-even units = Fixed costs ÷ Contribution margin per unit

With $50,000 fixed costs and a $40 margin, you break even at 1,250 units. Unit 1,251 is your first profitable sale.

Find your number

Enter your three costs and get break-even units, revenue and margin ratio instantly.

Open Break-even Calculator

What the number tells you

  1. Feasibility check. If break-even is 1,250 units and your market realistically buys 400, the model doesn't work — change something before launching, not after.
  2. Pricing leverage. Raising price from $100 to $110 lifts the margin from $40 to $50 and drops break-even from 1,250 to 1,000 units. Small price changes move the target a lot.
  3. Cost focus. Cutting fixed costs lowers the bar for every month; cutting variable costs makes every sale count more. The calculator shows which lever moves your number further.

Common mistakes

  • Forgetting payment fees and returns in variable costs — they're 3–8% of price for most online sellers.
  • Counting your own unpaid time as free. Pay yourself in the fixed costs, or the "profit" is an illusion.
  • Using best-case price. Use your realistic average after discounts.

Pair the break-even number with a simple expense log — the expense tracker works for any small operation — and invoice professionally with the Invoice Generator once the sales arrive.

General information, not financial advice.

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