What the break-even calculator does
Break-even is the number of units — or the amount of revenue — at which a business covers all its costs and starts making a profit. Enter fixed costs, the selling price per unit and the variable cost per unit, and the calculator returns the break-even quantity, the break-even revenue, and the contribution margin per unit and as a percentage. It is the first calculation for any product launch, price change, café, food truck, SaaS plan or side business, and it runs in your browser.
The formulas
Contribution margin per unit = Price − Variable cost per unit
Contribution margin % = (Price − Variable cost) ÷ Price × 100
Break-even units = Fixed costs ÷ Contribution margin per unit
Break-even revenue = Fixed costs ÷ Contribution margin %
Fixed costs $50,000/yr, price $25, variable cost $10:
margin = $15/unit (60%)
break-even = 50,000 ÷ 15 = 3,334 units = $83,333 revenueFixed vs variable costs
| Fixed (do not change with volume) | Variable (change per unit sold) |
|---|---|
| Rent, lease payments | Materials and ingredients |
| Salaries of permanent staff | Packaging and shipping per order |
| Insurance, licences, software subscriptions | Payment processing fees (2–3% of price) |
| Loan repayments, depreciation | Sales commission per sale |
| Marketing retainers, website hosting | Hourly labour tied to output |
Some costs are semi-variable — a utility bill with a standing charge plus usage, or staff who are paid a base plus overtime. Split them into the two parts, or treat the base as fixed and the rest as variable per unit at typical volume.
Using the result
- Compare with realistic demand. If the café must sell 280 coffees a day to break even and the location sees 200 customers, the plan needs changing before opening, not after.
- Margin of safety = (expected sales − break-even sales) ÷ expected sales. A 30% margin of safety means sales can fall 30% before losses begin.
- Target profit: units needed = (fixed costs + target profit) ÷ contribution margin. For $30,000 profit in the example: (50,000 + 30,000) ÷ 15 = 5,334 units.
- Test the levers: raising the price to $28 drops break-even to 2,778 units; cutting variable cost to $8 drops it to 2,942; cutting fixed costs by $10,000 drops it to 2,667. Try each in the calculator.
Break-even for services and subscriptions
For a service business, a “unit” can be an hour, a project or a client; the variable cost is what each one directly consumes. For subscriptions, use monthly figures: fixed monthly costs, monthly price per subscriber, and variable monthly cost per subscriber (hosting, support, payment fees). The result is the number of subscribers needed to cover costs — and because subscribers churn, compare it with the steady-state count your acquisition and churn rates support, not just the signup count.
Limits of the model
- It assumes one product at one price. For several products, use a weighted average contribution margin based on the expected sales mix.
- It assumes costs are linear. Volume discounts on materials or a second shift of staff create steps.
- It ignores timing — cash may run out before the break-even volume is reached, which is a cash-flow question, not a break-even one.
- Taxes are not included; break-even is a pre-tax concept.