Find the units and revenue you need to cover your costs, with a profit target option and a chart. Free.
Materials, packaging, shipping, sales commission for one unit.
Enter fixed costs, price and variable cost.
NinjaFunction's Break-Even Calculator shows how many units you must sell to cover your fixed and variable costs. Enter fixed costs, price and variable cost per unit to get the break-even units, the break-even revenue and the contribution margin, add a profit goal to see the units needed for it, and read the result on a chart. Nothing is uploaded.
| Item | Value |
|---|---|
| Fixed costs per month | 50,000 |
| Selling price per unit | 25 |
| Variable cost per unit | 15 |
| Contribution per unit | 10 |
| Break-even units | 5,000 |
| Break-even revenue | 125,000 |
| Contribution margin | 40% |
Break-even only gets you to zero. To earn 10,000 a month, add it to the fixed costs: (50,000 + 10,000) ÷ 10 = 6,000 units. The extra 1,000 units are what turn a covered business into a profitable one, and it is the number to put on a sales target.
Revenue starts at zero and climbs steeply. Total cost starts at your fixed costs and climbs more slowly. They meet at the break-even point. To the left the cost line is on top and you lose money. To the right the revenue line is on top. The angle between them is the contribution per unit: the wider the gap, the faster you get into profit.
Once you know the break-even, ask how far above it you are. If you usually sell 8,000 units and the break-even is 5,000, the margin of safety is (8,000 − 5,000) ÷ 8,000 = 37.5%. Sales could fall by more than a third before you start losing money. A margin of safety of 5% means a slow month could put you in the red.
It is a plain way to judge how risky a business is, and it works well when talking to a lender or a partner.
The simple formula assumes one product. With several, work out the average selling price and the average variable cost across your usual mix, and use those. If the mix changes, say customers start buying more of the cheap item, the break-even point moves too. Re-check it whenever your sales mix changes by a noticeable amount.
It is the number of units you must sell so that total revenue equals total cost. Below it you make a loss, above it a profit.
Break-even units = Fixed costs ÷ (Selling price − Variable cost per unit). The bottom part is the contribution margin: how much each sale adds towards covering the fixed costs.
Costs that stay the same however much you sell in the short term: rent, salaries, insurance, loan repayments, software subscriptions. They are paid even in a month with no sales.
Costs that rise with every unit: materials, packaging, delivery, payment fees and sales commission. Double the units and these roughly double.
If the price is equal to or below the variable cost, every sale loses money or adds nothing, so more sales never cover the fixed costs. Raise the price or lower the variable cost.
No. It is a simple model. Taxes, changing prices, discounts and costs that jump (like needing a second shop) are not included.