Break-even Calculator

The question this page actually answers

Break-even analysis is not about profit. It is about survival per month: how many units must go out the door so that fixed costs are covered, after which every sale keeps its contribution and starts building profit. The tool needs three honest numbers — fixed costs that repeat regardless of sales, the selling price per unit, and the variable cost that each unit itself requires (materials, transaction fees, piece-rate labour).

Be disciplined about categories. Rent, subscriptions, insurance and salaries belong to fixed costs; packaging, payment processing and unit shipping belong to the variable side. Costs that scale in steps (a second oven, extra warehouse space) are neither clean "fixed" nor "variable": model them as fixed when the step applies now, and re-run the analysis when you outgrow it. And pricing must stay pre-tax: use the net price, since VAT or sales tax collected for the treasury is never your revenue.

A worked example, step by step

Problem: a workshop produces handmade lights. Fixed monthly costs are 8,400. Each light sells for 24.50; materials and per-unit costs total 17.00.

1. Contribution per unit: 24.50 − 17.00 = 7.50.
2. Units to cover fixed costs: 8,400 ÷ 7.50 = 1,120 lights per month.
3. Revenue at break-even: 1,120 × 24.50 = 27,440.
4. Sense-check: 1,120 units each contributing 7.50 give 8,400 — exactly the fixed block.

Every light beyond 1,120 adds 7.50 of profit before other considerations, which is the number that makes scaling conversations concrete.

Profit by volume for the example

At 800 the workshop loses exactly 280 units × 7.50; at 1,400 it gains precisely 280 units × 7.50. Volume moves the result linearly once the fixed block is defined.

Mistakes that fake a lower break-even

• Counting only obvious fixed costs. Software subscriptions and marketplace fees hide in statements; audit a full month before entering the figure.
• Paying yourself nothing. Owner time is a cost. Using a zero salary makes break-even a fantasy.
• Setting price including tax. VAT and sales tax belong to the authority; price net, or the analysis overstates your margin.
• Assuming the mix is one product. Multi-product businesses need a weighted contribution across the mix, not the cheapest product's.
• Forgetting price elasticity. Raising price lowers the break-even quantity — and may lower demand. Re-run at several prices and check both channels.

Keep exploring

• Profit Margin Calculator — what share of revenue survives as profit.
• Markup Calculator — build the selling price from your cost.
• Unit Price Comparison — compare supplier quotes per unit fairly.
• Guide: Markup vs Margin.