Find the sales volume where revenue finally covers every cost. Enter your fixed costs, price, and variable cost per unit to see your break-even point in units and revenue, contribution margin, and how much cushion you have before you lose money.
Rent, salaries, software, insurance — per period (e.g. per month).
Materials, fees, shipping.
Revenue vs total cost. They cross at the break-even point.
Contribution margin is the engine
Only the gap between price and variable cost — the contribution margin — pays down fixed costs. Raise price or cut variable cost and your break-even volume drops fast. A small price increase often beats chasing more volume.
Watch the margin of safety
Break-even tells you the floor; margin of safety tells you how close you're standing to it. Under ~20% is fragile — a slow quarter tips you into a loss. Above ~50% gives real room to absorb a downturn or invest in growth.
Pick a consistent period
Use the same time frame for fixed costs and expected units. Monthly fixed costs give a monthly break-even; annual gives annual. Mixing them is the most common mistake in a break-even analysis.
Break-even units = fixed costs ÷ contribution margin per unit, where contribution margin per unit = selling price − variable cost per unit. For break-even revenue, multiply break-even units by price, or divide fixed costs by the contribution margin ratio. At this volume, total revenue exactly equals total costs and profit is zero.
Contribution margin is what's left from each unit after its variable cost: price − variable cost. It's the money each sale "contributes" toward fixed costs and then profit. The contribution margin ratio expresses it as a percentage of price. Higher contribution margin means you break even at a lower volume.
Margin of safety is how far expected sales sit above break-even: (expected − break-even) ÷ expected. A 40% margin of safety means sales could fall 40% before you'd start losing money. The smaller it is, the more exposed you are to a downturn.
Fixed costs don't move with volume — rent, salaries, software, insurance — you pay them at zero units or ten thousand. Variable costs scale per unit — materials, packaging, payment fees, shipping. Break-even analysis sorts every cost into one of these buckets, because only the price-minus-variable gap can pay down fixed costs.
Units for a target profit = (fixed costs + target profit) ÷ contribution margin per unit. You treat the desired profit as an extra fixed cost the contribution margin has to cover. This tool shows both the zero-profit break-even and the volume needed for any profit target you enter.
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