AixKit
All-in-One Online Calculators
AixKit
All-in-One Online Calculators
Part of: Finance →
Break-even analysis is one of the most important calculations in business planning. This break-even calculator lets you calculate break-even units, break-even revenue, and contribution margin instantly — showing the exact sales volume your business must reach before it starts generating profit. Whether you are planning pricing, testing cost structures, or modelling a new product line, knowing your break-even point makes every decision clearer. Ideal for small business owners, ecommerce operators, and financial planners who need to validate that their pricing and cost model is sustainable.
Many businesses do not have a sales problem — they have a break-even problem. Too many fixed costs or too thin a margin means no level of volume makes the business viable.
Key Break-even Formulas
Break-even Units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit)
Contribution Margin = Selling Price per Unit − Variable Cost per Unit
Break-even Revenue = Break-even Units × Selling Price per Unit
Example: Fixed Costs 5,000 | Price 50 | Variable Cost 30 → Contribution Margin 20 → Break-even Units 250 → Break-even Revenue 12,500
Used by small business owners, ecommerce sellers, and startup founders for pricing and cost planning. No data stored. Calculations run instantly in your browser.
Tip: Start with Mode 1 (Break-even Units) if you know your cost structure. Use Mode 3 to find what you need to sell to hit a specific profit target.
Break-even Units = Fixed Costs ÷ Contribution Margin per Unit
Contribution Margin per Unit = Selling Price − Variable Cost per Unit
A business breaks even when total contribution from all sales exactly covers all fixed costs.
Your break-even point tells you the minimum sales volume to survive. Set your sales target well above it — build a margin of safety by targeting 130–150% of break-even volume.
If your break-even unit count feels too high, your selling price may be too low for your cost structure. Use the Selling Price Calculator to find the price that produces a viable contribution margin.
Once you know your break-even point, use the Profit Margin Calculator to confirm the gross margin on units sold above it. This tells you how quickly profit accumulates beyond the break-even threshold.
Discounts reduce contribution margin and raise the break-even point. A 15% discount on a product with a 40% CM ratio raises break-even revenue by 37.5%. Use the Discount Calculator before setting promotional pricing.
The break-even point is the level of sales at which total revenue equals total costs — the business makes neither a profit nor a loss. Every unit sold below the break-even point contributes toward covering costs but produces a net loss for the period. Every unit sold above it generates profit.
Break-even analysis is useful at every stage of a business — from validating a new product idea before launch, to reviewing whether an existing product line is still viable after a supplier price increase. Unlike a profit margin calculation (which tells you how profitable a sale is), break-even tells you how many such sales you need before the business becomes sustainable.
Use the Selling Price Calculator to find the right per-unit price first, then bring that price into this calculator to test the break-even point before committing to it.
| Cost Type | Definition | Business Examples |
|---|---|---|
| Fixed Costs | Stay the same regardless of how many units you produce or sell | Rent, salaries, insurance, software subscriptions, annual licences, admin overhead, loan repayments |
| Variable Costs | Change directly with production or sales volume | Product/materials cost, packaging, payment processing fee per transaction, shipping per unit, direct labour per job, marketplace fees |
| Contribution Margin | Selling price minus variable cost — what each sale contributes toward fixed costs and eventual profit | If price = $50 and variable cost = $30, contribution = $20 per unit |
Getting this distinction right is critical. Many small businesses mis-classify variable costs as fixed (or ignore them entirely), which understates their break-even point and leads to profitability surprises.
The break-even units calculation requires three inputs: your total fixed costs for the period, your selling price per unit, and your variable cost per unit. From these, you first calculate the contribution margin, then divide fixed costs by that contribution margin.
Step 1: Contribution Margin = Selling Price − Variable Cost per Unit
Step 2: Break-even Units = Fixed Costs ÷ Contribution Margin
The result tells you how many units must be sold in the period to cover all costs. Since you cannot sell a fraction of a unit, always round up to the next whole unit.
Fixed Costs per month: $4,000 (storage, platform subscriptions, advertising budget, admin time)
Selling price: $45 per unit | Variable cost: $22 per unit (product + packaging + processing fee)
Contribution Margin: $45 − $22 = $23 per unit
Break-even Units: $4,000 ÷ $23 = 174 units per month (rounded up)
Break-even Revenue: 174 × $45 = $7,830 per month
Every unit sold beyond 174 generates $23 in pure profit contribution.
After confirming your break-even, use the Profit Margin Calculator to validate the margin you are earning on units sold above the break-even point.
Break-even units tells you how many individual items to sell. Break-even revenue tells you the dollar value of sales needed to cover all costs. For single-product businesses these convert directly. For multi-product or service businesses, revenue break-even is often more useful because it does not depend on knowing per-unit volumes.
The revenue-based formula uses the Contribution Margin Ratio (CMR) — the percentage of each revenue dollar that contributes to fixed costs and profit:
CM Ratio = (Contribution Margin per Unit ÷ Selling Price per Unit) × 100
Break-even Revenue = Fixed Costs ÷ CM Ratio (as a decimal)
Design agency — monthly fixed costs: $8,000 (salaries, studio, software)
Average project revenue: $1,200 | Average variable cost per project: $480 (freelancer fees, tools, delivery time)
Contribution Margin: $720 | CM Ratio: 60%
Break-even Revenue: $8,000 ÷ 0.60 = $13,333 per month
Break-even Projects: $13,333 ÷ $1,200 = 12 projects per month
If the agency completes more than 12 projects per month, each additional project contributes $720 to profit.
The contribution margin is the engine of your break-even analysis. A high contribution margin means fewer units are needed before fixed costs are covered. A low contribution margin means you need significantly higher volume to survive — and any disruption (a fee increase, a supplier price rise, a return rate spike) can push you back below break-even.
Businesses often focus on revenue targets but neglect the structure of their margin. Selling 500 units at $60 with a $5 contribution margin produces $2,500 in contribution. Selling 200 units at $100 with a $40 contribution margin produces $8,000 in contribution. Less volume, higher contribution margin — far better business model for covering fixed costs and building profit.
A 10% discount on a $50 product with a $20 contribution margin does not reduce profit by 10% — it reduces contribution margin by 25% (from $20 to $15). The break-even point increases substantially. Use the Discount Impact Calculator to model exactly how a discount raises your break-even — it shows the exact profit loss per unit and the sales volume increase needed to recover it.
Some costs are partly fixed and partly variable — utilities, casual labour, shipping above a threshold. Mis-classifying these as entirely fixed overstates your contribution margin and understates break-even units. Review every cost line carefully.
Ecommerce sellers frequently omit marketplace fees (Amazon FBA, eBay, Etsy) and payment processing fees from variable costs. These can add 12–18% to effective variable cost, which dramatically reduces contribution margin and raises break-even units.
Break-even is always period-specific. Fixed costs that are annual (insurance, annual software licences) must be converted to monthly if your break-even is monthly. Inconsistent time periods produce unreliable results.
Returns, damaged goods, and inventory shrinkage all reduce effective revenue and increase effective variable cost. A 5% return rate on 200 units means you are selling 190 net units — but variable costs were incurred on 200. Build return rates into your variable cost or volume assumptions.
Break-even changes every time a cost changes. A rent increase, a supplier price rise, a new software subscription, or a platform fee change all shift your break-even point. Recalculate quarterly or after any material cost change.
Break-even is the floor, not the target. Once you know your break-even point, use the Markup Calculator and Profit Margin Calculator to set a price that generates meaningful profit above it — not just survival.
Monthly fixed costs: $2,200 (storage fee $600, advertising budget $1,000, subscriptions $200, admin time $400)
Selling price: $28 per candle | Variable cost: $9 product + $3 packaging + $2.80 platform fee (10%) + $1.20 processing = $16 per unit
Contribution Margin: $28 − $16 = $12 per candle (CM Ratio: 42.9%)
Break-even Units: $2,200 ÷ $12 = 184 candles per month
Break-even Revenue: 184 × $28 = $5,152 per month
At 250 units: profit = (250 − 184) × $12 = $792. At 300 units: profit = $1,392.
Monthly fixed costs: $9,500 (rent $5,000, 2 staff $4,000, insurance/utilities $500)
Average selling price: $145 | Variable cost (wholesale): $65 per pair + $0.50 EFTPOS fee
Contribution Margin: $145 − $65.50 = $79.50 per pair (CM Ratio: 54.8%)
Break-even Units: $9,500 ÷ $79.50 = 120 pairs per month
Break-even Revenue: 120 × $145 = $17,400 per month
If the store runs a 15% sale, contribution drops to $54.25 — break-even rises to 175 pairs. Run the Discount Calculator before any promotion.
Monthly fixed costs: $6,000 (contractor salary $4,500, tools/subscriptions $800, office share $700)
Package price: $800/month per client | Variable cost per client: $200 (direct service hours + reporting tools)
Contribution Margin: $800 − $200 = $600 per client (CM Ratio: 75%)
Break-even Clients: $6,000 ÷ $600 = 10 clients
Break-even Revenue: 10 × $800 = $8,000 per month
Client 11 onward: $600 pure profit per month each. Target 15 clients = $3,000 monthly profit. Use the Profit Margin Calculator to confirm margin benchmarks at each client tier.
Use the Percentage Calculator for any quick cross-checks on ratios, margin percentages, or growth targets in your break-even modelling.