How many units must you sell — and at what revenue — before fixed costs are fully covered and the business starts earning profit?
This tool is for: Small-business owners sizing up a new product, service line, or pricing change · Founders building a basic unit-economics model for a pitch or plan · Anyone deciding whether a sales target is realistic given fixed overhead
- The number of units you must sell to cover your fixed costs
- The revenue that unit volume represents at your chosen price
- Your contribution margin per unit and contribution margin ratio
Formulas Used
Break-Even Point (Units)
Break-Even Units = Fixed Costs / (Price per Unit − Variable Cost per Unit)
Where: Fixed Costs = Total costs that do not vary with sales volume over the period (USD), Price per Unit = Sale price of a single unit before discounts and tax (USD), Variable Cost per Unit = Direct cost incurred for each unit produced or sold (USD)
Source: U.S. Small Business Administration — Break-even analysis guidance
Contribution Margin Ratio
Contribution Margin Ratio = (Price per Unit − Variable Cost per Unit) / Price per Unit
Where: Price per Unit = Sale price of a single unit (USD), Variable Cost per Unit = Direct cost per unit (USD)
Source: Standard managerial-accounting identity — SBA business planning guidance
Key Insight
A 10% price increase and a 10% variable-cost reduction look symmetric but are not. On a product with a low contribution margin, the price increase moves break-even volume down much faster than the cost reduction — because price scales the whole margin while cost only trims a fraction of it.
Frequently Asked Questions
What happens if price per unit is less than or equal to variable cost per unit?
The contribution margin is zero or negative — every unit sold either contributes nothing to fixed costs or actively loses money. In that case there is no break-even point at any volume. The calculator returns -1 for units and revenue to flag this clearly: the fix is to raise price, cut variable cost, or change the product, not to sell more.
Does this calculator include taxes, interest, or depreciation?
No. This is an operating break-even on contribution margin only. Income tax applies to profit after break-even is reached, interest is usually a fixed cost that can be rolled into the Fixed Costs input, and depreciation is a non-cash fixed cost that can either be included or excluded depending on whether you want a cash break-even or an accounting break-even.
How do I use this for a business that sells multiple products with different margins?
This calculator models a single product with one price and one variable cost — it does not compute a blended break-even across a multi-product mix. For multiple products, the standard workaround is to use a weighted-average contribution margin: compute each product's contribution margin, weight each by its expected share of unit sales (the sales mix), and enter the weighted-average margin implicitly by choosing a representative price and variable cost that reproduce it. The result gives a break-even in equivalent units, not in real units of any single product, and is only valid as long as the sales mix stays roughly constant. If one product dominates revenue or the mix is expected to shift, run the calculator separately for each major product instead.
About This Calculator
Sources:
- U.S. Small Business Administration — Calculate your startup costs — Federal small-business guidance on fixed vs variable costs and break-even planning for new ventures
- OpenStax — Principles of Accounting, Volume 2: Managerial Accounting — Peer-reviewed open academic textbook (Rice University) covering cost-volume-profit analysis, contribution margin, and break-even formulas used in this calculator
Limitations:
- Single-product model — does not handle a blended break-even across multiple products with different margins
- Assumes variable cost per unit is constant — ignores volume discounts on inputs and step-function capacity additions
- Does not include income taxes, interest expense, or depreciation
- Does not model timing — treats break-even as a pure volume threshold, not a date
- Contribution margin ratio is rounded to two decimal places and may differ slightly from accounting-grade output
When to consult a professional: Before committing significant capital to a product launch, pricing change, or facility expansion — especially when fixed costs exceed one quarter of projected annual revenue
This calculator estimates a classic unit-economics break-even point under the assumption of constant price and constant variable cost per unit. It is a planning model, not a forecast — real-world businesses face volume-tiered costs, seasonality, returns, and discounts that can shift the true break-even point. Use the result as a directional reference, not as an accounting output.