What the Break-Even Calculator Does
The break-even calculator finds the sales volume at which a business covers all its costs — no profit, no loss. Below that volume the business is subsidizing every sale; above it, each additional unit contributes profit at a predictable rate. It is the first viability test for a new product, price point, or location, because it converts vague confidence into a concrete monthly target you can compare against realistic demand. Our editorial analysis treats break-even volume, not projected profit, as the honest starting point for any launch budget.
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Break-Even Volume = Fixed Costs / (Price − Variable Cost per Unit)
Break-Even Revenue = Break-Even Volume × Price
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What each input means
- Fixed Costs — expenses that do not change with sales volume in the period: rent, salaries, insurance, software subscriptions. Use one consistent period (here, one month).
- Price — the selling price per unit, after average discounts.
- Variable Cost per Unit — costs that scale with each sale: materials, packaging, per-unit shipping, sales commissions.
- Contribution Margin (Price − Variable Cost) — what each sale contributes toward covering fixed costs. If this figure is zero or negative, no volume breaks even.
Worked example
Fixed costs are $8,400 per month. The product sells at $120 with a variable cost of $45 per unit.
- Contribution margin: $120 − $45 = $75 per unit.
- Break-even volume: $8,400 / $75 = 112 units per month.
- Break-even revenue: 112 × $120 = $13,440 per month.
- Verify: at 112 units, revenue is $13,440; total cost is $8,400 + (112 × $45) = $8,400 + $5,040 = $13,440. Costs and revenue match exactly.
Limitations — when not to rely on this
The model assumes one product, one price, and costs that behave neatly. Real businesses face mixed product lines, step costs (a second employee, a bigger premises) that jump at certain volumes, and variable costs that change with supplier pricing. It also ignores timing: breaking even on paper in month six does not help if cash runs out in month three. Use the result as a minimum viability threshold, then stress-test it with a lower price and higher costs.