Break-Even Calculator
Find the number of units you need to sell to cover fixed costs — and how many more to hit a target profit.
With £10,000.00 in fixed costs and a contribution margin of £20.00 per unit (40.0% of price), you need to sell 500 units — that's £25,000.00 in revenue.
Results update as you type. Match the period of fixed costs to the period you want to break even over (e.g. monthly fixed → monthly break-even units).
Formula
Break-even units come from a single division:
units = fixed_costs / (price − variable_cost).
The denominator is the contribution margin per unit. Add a target profit to budget upward:
units = (fixed + target_profit) / (price − variable_cost).
The result is rounded up because partial units don't sell — selling 142 of 142.86 leaves you
short of break-even.
When this calculator helps
Knowing your break-even point is one of the first numbers any UK small-business owner should pin down. Use this calculator when you are pricing a new product, writing a business plan for the bank, or deciding whether a side hustle can realistically replace a salary — it tells you the plain truth of how many units you must sell before the business stops losing money.
It is built for the questions founders genuinely wrestle with: how many coffees a day does the new café need to cover the rent, how many subscriptions before the SaaS idea washes its face, how many billable days a freelancer must invoice to clear monthly overheads. Whether you run a market stall, an online shop, or a limited company with staff, the same arithmetic applies — fixed costs divided by what each sale contributes.
How to read your result
The headline figure is the number of units you must sell in the period to cover every cost and make neither a profit nor a loss. Multiply that by your price and you get the break-even revenue — the turnover figure to aim past. Anything sold beyond the break-even point earns you the full contribution margin as profit, which is why the first sale after break-even feels so much better than the last one before it.
The contribution margin is the engine of the whole calculation: price minus variable cost, the slice of each sale left over to chip away at fixed costs. A thin margin means a punishingly high break-even volume; a fat one means you clear your overheads quickly. If the unit count looks alarmingly high, the lever that moves it most is usually the margin — a small price rise or a cheaper supplier can cut the break-even sharply.
A worked example
Picture a small UK candle business. Fixed costs — workshop rent, insurance, a software subscription and the owner's modest base salary — come to £10,000 a month. Each candle sells for £50 (ex-VAT) and costs £30 in wax, wicks, packaging and card fees, so the contribution margin is £20. Dividing £10,000 by £20 gives 500 candles a month to break even, which at £50 each is £25,000 of monthly revenue.
Now suppose the owner wants £4,000 of monthly profit on top. Add that to the fixed costs: (£10,000 + £4,000) / £20 = 700 candles. Those extra 200 units are the cost of the profit target — a concrete, sellable number rather than a vague hope, which is exactly what makes break-even modelling so useful for planning.
Common mistakes to avoid
Most break-even figures come out wrong not because the arithmetic is hard but because the inputs are sloppy. A few traps catch UK owners again and again.
- Forgetting to pay yourself — leaving the owner's own time and a market-rate salary out of fixed costs flatters the number and hides a business that only 'works' because you work for free.
- Mixing VAT-inclusive and VAT-exclusive prices — enter the price net of VAT and the variable cost net of reclaimable VAT, or the contribution margin will be overstated.
- Treating semi-variable costs as purely fixed — utilities and some staffing have a usage element that rises with output; lump the whole lot into fixed and your break-even looks lower than it really is.
- Mixing time periods — annual fixed costs with a monthly price assumption produces a meaningless answer.
VAT and the UK price you enter
In the UK, prices shown to consumers are usually quoted including VAT at the standard 20% rate, so a candle on a £50 shelf ticket is really £41.67 of revenue to you and £8.33 of VAT that belongs to HMRC. For break-even maths you must strip that VAT out: enter £41.67, not £50, otherwise the calculator credits you with money you never keep and understates how many units you truly need to sell.
If your turnover is below the VAT registration threshold you are not charging VAT at all, so your shelf price and your revenue are the same figure and you can enter it directly. Either way, be consistent across price and variable cost — use ex-VAT throughout, reclaiming input VAT on materials where you are registered — and the contribution margin will reflect the cash that actually reaches your account.
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Frequently asked questions
What's the difference between fixed and variable costs?▾
Fixed costs don't change with how much you sell — rent, salaries, software subscriptions, business rates, insurance. Variable costs scale with sales — raw materials, packaging, payment processing fees, sales commission, per-unit shipping. The split isn't always clean (some costs are 'semi-variable'), but for break-even maths the rule is: if it costs the same whether you sell 100 or 1000 units, it's fixed; if it scales, it's variable.
What does 'contribution margin' mean?▾
It's the gap between your selling price and the variable cost of that unit — what each sale 'contributes' to covering fixed costs and (eventually) profit. If you sell at £50 and the variable cost is £30, every unit contributes £20 toward fixed costs. Once fixed costs are covered, every additional unit's contribution is profit. Contribution margin ratio expresses the same thing as a percentage of price (£20 / £50 = 40%).
Why does the calculator round up?▾
Because you can't sell 142.857 units. If the maths says you need 142.857 to break even, selling 142 leaves you slightly below — 143 is the actual minimum to clear costs. The 'exact' figure is shown beneath the headline for completeness, but the rounded number is the actionable one.
How do I use this for a service business with no 'units'?▾
Treat your billable hour, day, or project as the unit. For a £100/hour consultant: price per unit = £100; variable cost per unit = direct costs of delivering an hour (subcontractor rates, project-specific software, travel for that hour). Fixed costs are your monthly overhead. The break-even unit count is then how many billable hours/days/projects you need a month.
What's the difference between break-even and target-profit modelling?▾
Break-even (target profit = 0) tells you when you stop losing money. Target-profit modelling (target > 0) tells you when you start hitting a profit goal. The maths is the same — you're just adding the desired profit to the fixed-cost figure: units = (fixed + target profit) / contribution margin. Use it for budgeting: 'we need £30k of net profit, so we need to sell X units'.
Should I use monthly or annual figures?▾
Either, but be consistent. If fixed costs are monthly (£10k/month rent + salaries), the break-even is units per month. If you put in annual fixed costs (£120k/year), the break-even is units per year. Mixing periods (annual fixed costs with monthly target profit) gives nonsense numbers.