What this calculator does
Break-even is the point where a business sells enough to cover its costs but has not yet made a profit. Knowing that number turns a vague sense of overheads into a concrete sales target.
This calculator uses the contribution method: each sale contributes the difference between price and variable cost towards fixed costs, and break-even is reached when those contributions cover the fixed costs in full.
How the calculation works
Variable costs are subtracted from the selling price to give the contribution per unit. Fixed costs are then divided by that contribution to find how many units must be sold.
The break-even revenue multiplies those units by the selling price. Because you cannot sell a fraction of a unit, the answer is also rounded up to the next whole unit.
Worked example: A workshop with 5,000 of monthly fixed costs
- 1Fixed costs: 5,000.00
- 2Selling price per unit: 50.00
- 3Variable cost per unit: 30.00
- 4Contribution per unit: 50.00 − 30.00 = 20.00
- 5Break-even quantity: 5,000.00 ÷ 20.00 = 250 units
The workshop must sell 250 units, generating 12,500.00 of revenue, to break even.
Common mistakes
- Including variable costs inside fixed costs, which double-counts them and overstates the break-even point.
- Forgetting payment processing fees, which are variable and reduce contribution.
- Ignoring owner pay. If the owner needs an income, treat it as a fixed cost.
- Assuming break-even is a permanent target. Fixed costs and prices change, so the number must be revisited.