How to use the break-even calculator
- Enter your fixed costs for the period (rent, salaries, software).
- Enter the price per unit you sell at.
- Enter the variable cost per unit (materials, shipping).
- Read the units and revenue needed to break even.
Contribution margin
The contribution margin is price minus variable cost - the slice of each sale that pays down fixed costs. Divide fixed costs by that margin to get the break-even units.
A worked example
Fixed costs of $5,000, a $50 price and $30 variable cost give a margin of $20. Break-even is 250 units (5,000 / 20), or $12,500 in revenue. Every unit after that adds $20 to profit.
Beyond break-even
Break-even is the floor, not the goal. Map units above it to profit directly: each extra sale contributes its full margin once fixed costs are covered.