Find out how many units you need to sell before you start making a profit. Enter your fixed costs, the selling price and the cost to make each unit, and see the break-even point, the revenue it needs, and how many units reach a profit target.
Every business has two kinds of cost. Fixed costs stay the same whether you sell one unit or a thousand — rent, salaries, software. Variable costs are what each unit itself costs to make or buy. The gap between your selling price and the variable cost is the contribution each sale makes towards the fixed costs.
Example. Fixed costs are 10,000 a month. You sell a product for 50 that costs 30 to make, so each sale contributes 20. To cover 10,000 you need 10,000 ÷ 20 = 500 units. That is 500 × 50 = 25,000 in sales.
It is the point where your total sales exactly cover your total costs — both the fixed costs that stay the same and the variable cost of each unit. Below it you make a loss; above it you make a profit.
It is the selling price minus the cost to make one unit. Each unit you sell "contributes" that amount towards your fixed costs. Once the contributions add up to the fixed costs, you have broken even.
You can only sell whole units, and selling a fraction of one would still leave you short. So the calculator rounds up to the next whole unit that covers the costs.
If each unit costs as much or more than you sell it for, the contribution is zero or negative, and no number of sales will cover the fixed costs. The calculator says so clearly instead of showing an impossible number.
Use the same period for everything. If the fixed costs are for a month, the break-even units and revenue are for a month too. Do not mix monthly costs with yearly sales.
A calculator gives you one answer. A cashbook shows you the whole picture: write down cash in and cash out, see where the money goes in charts and on a calendar, and share a ledger with your family, team or friends.
This takes a few seconds.
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