Break-Even Calculator

Break-Even Analysis

The Contribution Margin

Contribution margin = Selling price − Variable cost per unit. This is what each sale contributes toward covering fixed costs. Break-even units = Fixed costs ÷ Contribution margin. Above break-even, each additional unit generates pure profit (at the contribution margin rate).

Fixed vs Variable Costs

Fixed costs don't change with output — rent, salaries, insurance, loan repayments. Variable costs increase with each unit sold — materials, commissions, packaging, delivery. The distinction matters because variable costs affect your margin, fixed costs affect your minimum viable sales level.

Using Break-Even for Pricing

If your break-even is too high at current pricing, you have three levers: raise price (check market tolerance), reduce variable costs (renegotiate suppliers, change materials), or reduce fixed costs (renegotiate lease, reduce headcount). Break-even analysis shows which lever has the most impact.