Break-Even Calculator
Every business has a moment in the month when it stops losing money and starts making it — that's the break-even point. Enter your monthly fixed costs (rent, salaries, software, insurance), your variable cost per unit, and your selling price to see exactly how many units you need to sell, and what that translates to in revenue.
How is this calculated?
Break-even units = Fixed Costs ÷ (Selling Price − Variable Cost per unit). The denominator is your contribution margin per unit — what each sale contributes toward covering overhead after its own variable costs. Multiply break-even units by selling price to get break-even revenue. The model assumes fixed costs really are fixed within the relevant range and that the selling price holds across all units; volume discounts or step changes in cost will shift the answer.
Frequently Asked Questions
What counts as a fixed cost versus a variable cost?
Fixed costs don't change with volume in the short term — rent, salaried staff, business insurance, software subscriptions, accountant. Variable costs scale with each unit sold — raw materials, packaging, payment processing fees, sales commission, freight. Marketing is often hybrid: a baseline plus a per-acquisition portion.
What is contribution margin?
It's selling price minus variable cost per unit — the chunk of each sale available to cover fixed costs and, eventually, profit. A high contribution margin means each extra sale moves the needle materially; a low one means you need volume to make the numbers work.
How do I include my own time as an owner?
If you're a sole proprietor paying yourself out of profits, your time is implicitly factored in. To value your time explicitly, add a notional salary for yourself to fixed costs — that lifts your true break-even and reveals whether the business actually pays you a fair wage versus simply covering overhead. Self-employment tax adds another layer.
What's the limitation of this model?
It's a single-product, single-price snapshot. Real businesses sell multiple SKUs at different margins, and break-even shifts with the product mix. For a more nuanced view, calculate a weighted-average contribution margin across the product mix, or model each product line separately for a clearer picture.
Last updated: May 2026 · Rates sourced from IRS