Break-even calculator

What the result means

Break-even is the first unit count where contribution (price minus variable cost) has covered fixed costs. After that, extra units are profit before tax.

How it is calculated

Units = ceil(fixed costs ÷ (price − variable cost))

• Fixed costs: Costs that do not change with the next unit.
• Contribution: Price minus variable cost.

If contribution is not positive, extra units make the loss larger.

Worked example

$10,000 fixed, $50 price, $30 variable

A simple product.

Contribution

$20

Units

$10,000 ÷ $20 = 500

Sale 501 is the first unit with profit in this model.

Fixed versus variable

Rent and a salaried bookkeeper are often fixed. Materials and transaction fees are variable. Many costs are mixed. This is a planning sketch, not an accounting file.

A healthy margin on each sale still loses money if you do not sell enough units to cover rent. If each $125 sale contributes $25 after variable cost, you need 160 sales to cover $4,000 of monthly fixed costs. The 161st sale is the first one that is profit in this model.

Questions