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
The break-even point is foundational for any US small-business owner or startup founder. Reach for this calculator when you are setting a price, pitching investors, applying for an SBA loan, or sanity-checking whether a new product line can carry its own weight. It answers the bluntest question in business: how many units do I have to move before I stop bleeding cash?
It fits the decisions entrepreneurs actually face — how many plates a night the restaurant needs to cover the lease, how many monthly subscribers before the app turns the corner, how many billable hours a consultant must invoice to clear overhead. Whether you sell physical product on Shopify, ship through Amazon FBA, or bill for services, the math is identical: divide fixed costs by the contribution each sale throws off.
How to read your result
The headline number is the unit volume you must sell in the period to fully cover costs — no profit, no loss. Multiply it by your price to get break-even revenue, the top-line number to push past. Every unit sold beyond that point drops its entire contribution margin straight to the bottom line, which is why scale matters so much once you have cleared the hump.
Contribution margin drives everything here: price minus variable cost per unit, the dollars left over from each sale to attack fixed costs. A skinny margin forces a brutally high break-even volume; a healthy one gets you to profitability fast. When the unit count looks intimidating, the most powerful lever is usually the margin — a modest price increase or a better supplier deal can pull your break-even down dramatically.
A worked example
Take a small US coffee roaster. Fixed costs — warehouse lease, equipment financing, a part-time employee and the owner's draw — run $12,000 a month. A bag of beans sells for $18 and costs $7 in green coffee, packaging, and Stripe fees, giving an $11 contribution margin. Dividing $12,000 by $11 gives 1,091 bags a month to break even, which at $18 a bag is about $19,640 in monthly revenue.
Say the owner wants $3,300 in monthly profit. Add it to fixed costs: ($12,000 + $3,300) / $11 = 1,391 bags. The extra 300 bags are the price of that profit target — a hard sales number to plan marketing and staffing around, rather than a wish. That is what makes break-even modeling so useful for a growing business.
Common mistakes to avoid
Break-even figures usually go wrong because of the inputs, not the formula. A handful of errors trip up US founders repeatedly.
- Leaving out the owner's pay — if your own time and a market-rate salary aren't in fixed costs, the number looks rosy while quietly assuming you work for nothing.
- Forgetting payment-processor and platform fees — Stripe at roughly 2.9% plus 30 cents, or Amazon's referral and fulfillment fees, are real variable costs that thin your margin.
- Treating semi-variable costs as fixed — utilities, hourly labor, and shipping have a volume-driven component; bundling them entirely into fixed costs understates your break-even.
- Mixing time periods — pairing annual fixed costs with a monthly price assumption produces a number that means nothing.
Sales tax and the US price you enter
In the US, posted prices are almost always quoted before sales tax — the tax is added at checkout and varies by state, county, and city, from zero in states like Oregon to north of 9% combined in parts of California or Louisiana. That actually simplifies your break-even input: the price on your menu or listing is the revenue you keep, so enter it as-is. You collect sales tax on the customer's behalf and remit it to the state; it is never your money and should stay out of the calculation entirely.
The catch is on the cost side. Sales tax you pay on supplies and equipment is usually a real expense unless you hold a resale certificate, in which case inputs bought for resale are exempt. Keep your variable cost figure consistent with how you are actually taxed on materials, and your contribution margin will reflect the true cash each sale leaves behind.
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Frequently asked questions
Fixed vs variable costs — what's the line?▾
Fixed: doesn't change with sales volume. Rent, base salaries, software subscriptions, insurance, professional services. Variable: scales with each sale. COGS, packaging, payment processor fees (Stripe ~2.9%+30¢), sales commissions, per-unit shipping. Some costs are mixed (utilities have a base + usage component) — for break-even maths, simplify by assigning each cost to whichever side it leans toward more.
What is contribution margin?▾
Selling price minus variable cost per unit. It's what each sale contributes toward fixed costs and profit. $50 price minus $30 variable = $20 contribution per unit. The contribution margin ratio (40% in this case) is that figure as a percentage of price. The higher the ratio, the more leverage you have on each sale.
Why round up the number of units?▾
You can't sell a fraction of a unit. If the formula says 142.86 units to break even, selling 142 leaves you short and 143 is the first whole number that clears costs. The unrounded figure is shown for transparency, but the ceiling is the practical minimum.
How does this apply to a service business?▾
Substitute 'unit' with hour, day, or engagement. For a $200/hr consultant: price/unit = $200, variable cost = your direct cost of delivering that hour (subcontractor pay, project-specific tooling, travel/expenses for that hour). Fixed costs = your monthly overhead. The output is billable hours per month to break even.
How is target profit different from break-even?▾
Break-even (target = 0) covers your costs. Target profit asks: 'how many more units to make $X net?' Same arithmetic, larger numerator: units = (fixed + target profit) / contribution margin. Useful when you have a profit goal — owner draw, dividend target, expansion budget — and need to back-solve sales volume.
Monthly or annual? Does it matter?▾
It matters that you're consistent. If your fixed-costs figure is monthly, the unit answer is per month. Annual figures give annual unit counts. Don't mix periods (e.g., yearly fixed costs with monthly target profit) — the answer won't mean anything.