Break-Even Calculator

A break-even calculator tells you how many units you need to sell — or how much revenue you need to earn — before your business stops losing money and starts turning a profit. It's the line where total revenue equals total costs, and it's the most useful single number for evaluating a new product, a price change, or a business idea.

Break-even analysis depends on cleanly separating fixed costs (rent, salaries, software, insurance — costs that don't change with volume) from variable costs (materials, packaging, shipping — costs that scale with each unit sold). The gap between price and variable cost — your contribution margin — is what pays down fixed costs each time you make a sale.

You're launching a candle brand. Monthly fixed costs (rent, software, insurance) are $10,000. You sell each candle for $50, and the wax, wick, jar, and label cost $30 per unit:

• Contribution margin: $50 − $30 = $20 per candle
• Break-even units: $10,000 / $20 = 500 candles per month
• Break-even revenue: 500 × $50 = $25,000 per month
• Contribution margin ratio: $20 / $50 = 40%

If you sell 700 candles, profit is (700 − 500) × $20 = $4,000. Drop the price to $45 and break-even jumps to $10,000 / $15 = 667 units — a 33% increase in volume needed just to stay even.

• Validating a business idea — if break-even sales look unreachable in your market, the unit economics don't work.
• Pricing decisions — see exactly how much volume a price cut requires you to win back.
• Evaluating fixed cost commitments — a $2,000/month software subscription needs 100 extra units sold (at $20 contribution margin) to pay for itself.
• Setting sales targets — give your sales team a real floor: hit break-even, then earn commission above it.
• Negotiating with investors or banks — break-even and margin of safety are standard inputs in any pitch deck or loan application.

• Misclassifying costs. Sales commissions are variable, not fixed; software subscriptions are fixed even if you "could cancel anytime." Errors here distort the entire calculation.
• Forgetting owner draw or salary. If you need $5,000/month to live, that has to be in fixed costs — otherwise break-even is the point you start losing money personally.
• Ignoring sales mix. Multi-product businesses need a weighted-average contribution margin, not a single product's number.
• Treating break-even as static. A new lease, a raw material price hike, or a new hire all shift fixed or variable costs — recompute when anything material changes.
• Confusing break-even with profitability. Hitting break-even means you're not losing money. You still need a margin of safety above break-even to absorb a bad month.