The break-even point is the moment a product or business stops losing money and starts to profit. It is one of the first numbers any founder or product manager should know, because it sets the sales target that justifies your fixed costs. The Break-Even Calculator finds the exact number of units you must sell, using nothing more than three figures you already track.
How break-even works
Every unit you sell contributes a slice of money toward covering fixed costs. That slice is the selling price minus the variable cost per unit, known as the contribution margin. Divide your total fixed costs by the contribution margin and you get the number of units needed to cover everything. Beyond that point, each sale is profit.
break-even units = fixedCosts / (price - variableCost)
Fixed costs are expenses that do not change with volume, like rent, salaries, or software. Variable costs scale with each unit, like materials, packaging, or per-sale fees. The price must exceed the variable cost; if it does not, the contribution margin is zero or negative and no volume will ever break even.
How to use the Break-Even Calculator
- Enter your total fixed costs for the period you are analyzing.
- Enter the selling price per unit.
- Enter the variable cost per unit.
- Read the number of units you must sell to break even.
A worked example
Imagine fixed costs of 10,000, a selling price of 50, and a variable cost of 30 per unit. The contribution margin is 50 - 30 = 20. Dividing gives 10000 / 20 = 500 units. So you must sell 500 units to cover all costs; unit 501 begins generating profit. If you raised the price to 60, the margin would jump to 30 and break-even would fall to about 334 units.
Using the number to plan
Compare the break-even units to a realistic sales forecast. If you can comfortably exceed it, the model is sound; if not, revisit pricing or costs before launch. The calculator runs entirely in your browser, so your cost structure stays private while you test scenarios.
