What is the difference between fixed and variable costs?

Fixed costs stay the same regardless of how much you sell: rent, salaries, insurance, software subscriptions. Variable costs scale with every unit: materials, packaging, shipping, payment-processing fees. Sort each expense by asking whether selling one more unit changes it — misclassifying skews the result.

What is contribution margin?

Selling price minus variable cost per unit — the amount each sale contributes toward covering fixed costs and, after break-even, toward profit. In the worked example it is $50 − $33 = $17 per unit. The thinner the margin, the more units you need.

Why does the tool round the units up?

The exact break-even point is usually fractional — 588.24 units in the example — and you can’t sell a quarter of a product. Rounding up gives the first whole unit count at which revenue meets or exceeds total costs, so the revenue shown sits at or just past break-even.

What if my price is at or below my variable cost?

The tool shows 0, because break-even is impossible: every sale loses money, and selling more only deepens the loss. You would need to raise the price or cut the per-unit cost before volume can help.

How do I find the volume for a target profit?

Add the profit target to your fixed costs and divide by the contribution margin. In the example, earning $5,000 on top of covering $10,000 of fixed costs takes (10,000 + 5,000) ÷ 17 = 883 units.

How can I lower my break-even point?

Three levers: raise the price, reduce the variable cost per unit (both widen the contribution margin), or cut fixed costs. Price is usually the most powerful lever, but test whether a higher price would shrink demand enough to cancel the gain.

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Break-Even Calculator

Find the number of units you must sell to cover fixed and variable costs.

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Fixed costs$Price / unit$Variable cost / unit$

Break-even units

500

Break-even revenue

$25,000

How it works

The break-even point is the sales volume at which total revenue exactly covers total costs — no profit, no loss. Below it every period ends in the red; above it each extra unit sold adds its contribution margin straight to profit. This calculator returns both the unit count and the revenue that count represents.

The math starts with the contribution margin per unit: selling price − variable cost per unit — what each sale contributes toward covering fixed costs. Then break-even units = fixed costs ÷ contribution margin, rounded up to the next whole unit because you cannot sell a fraction of a product, and break-even revenue = that rounded-up unit count × price. If the margin is zero or negative the tool shows 0, since no sales volume can ever cover your costs.

Worked example: $10,000 in fixed costs, a $50 selling price, and $33 of variable cost per unit. The contribution margin is 50 − 33 = $17. Dividing, 10,000 ÷ 17 = 588.24, which rounds up to 589 units, for break-even revenue of 589 × $50 = $29,450.

Keep the time period consistent: if you enter monthly fixed costs, the answer is units per month. Classify costs honestly — rent, salaries, and insurance are fixed; materials, packaging, shipping, and card fees are variable; semi-variable items such as utilities belong wherever the larger share sits. To aim for a profit target instead of plain break-even, add the target to the fixed costs: in the example, earning $5,000 requires (10,000 + 5,000) ÷ 17 = 883 units. Finally, price is the most sensitive lever — a small price increase widens the margin and can cut the required volume sharply, though it may also cost you demand.

Frequently asked questions

What is the difference between fixed and variable costs?: Fixed costs stay the same regardless of how much you sell: rent, salaries, insurance, software subscriptions. Variable costs scale with every unit: materials, packaging, shipping, payment-processing fees. Sort each expense by asking whether selling one more unit changes it — misclassifying skews the result.
What is contribution margin?: Selling price minus variable cost per unit — the amount each sale contributes toward covering fixed costs and, after break-even, toward profit. In the worked example it is $50 − $33 = $17 per unit. The thinner the margin, the more units you need.
Why does the tool round the units up?: The exact break-even point is usually fractional — 588.24 units in the example — and you can’t sell a quarter of a product. Rounding up gives the first whole unit count at which revenue meets or exceeds total costs, so the revenue shown sits at or just past break-even.
What if my price is at or below my variable cost?: The tool shows 0, because break-even is impossible: every sale loses money, and selling more only deepens the loss. You would need to raise the price or cut the per-unit cost before volume can help.
How do I find the volume for a target profit?: Add the profit target to your fixed costs and divide by the contribution margin. In the example, earning $5,000 on top of covering $10,000 of fixed costs takes (10,000 + 5,000) ÷ 17 = 883 units.
How can I lower my break-even point?: Three levers: raise the price, reduce the variable cost per unit (both widen the contribution margin), or cut fixed costs. Price is usually the most powerful lever, but test whether a higher price would shrink demand enough to cancel the gain.
Is my data uploaded?: No — calculations run in your browser and your figures are never sent anywhere.

Break-Even Calculator

How it works

Frequently asked questions

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