Break-even point calculator: how much do you need to sell?

Every business has costs that arrive whether you sell anything or not, such as rent, salaries, software and loan payments, and costs that come with each sale, such as the product itself, packaging, delivery and card or marketplace fees. The break-even point is the sales level where the money left from each sale has paid for all the fixed costs. This calculator finds it in units for a single product, or in sales value for a shop or service with a known gross margin, and shows what you need for a profit target.

Quick answer

Break-even units = fixed costs ÷ (price per unit − variable cost per unit). With fixed costs of 12,000 a month, a price of 80 and variable costs of 50, each sale contributes 30, so the break-even point is 400 units, or 32,000 in sales. A 6,000 profit on top needs 600 units.

Fixed costs for the period

Rent, salaries, licences, software, loan payments: usually one month.

Currency

Price per unit (before VAT)

Variable cost per unit

Product, packaging, delivery, card and marketplace fees for one unit.

Targets (optional)

Profit target for the period

Units you expect to sell

Enter your fixed costs and your price and variable cost (or gross margin) to see the break-even point.

How to use the Break-Even Calculator

Choose "Per unit" for one product or an average order, or "By gross margin" for a shop or service selling many items.
Enter your fixed costs for the period, usually one month.
Enter the price and variable cost per unit, both before VAT, or your gross margin in percent.
Add a profit target and the units you expect to sell, if you want, and read the result.

Contribution margin: the number that drives everything

The contribution margin is what each sale leaves after paying for its own variable costs: price minus variable cost. In the example, an item sold for 80 that costs 50 to buy, pack and deliver contributes 30 towards rent and salaries. Divide the fixed costs of 12,000 by 30 and you get 400 units. As a share of the price, the contribution is 37.5%, so every 100 of sales covers 37.50 of fixed costs. Raising the price, cutting a variable cost or negotiating a lower supplier price all raise the contribution and lower the break-even point, often faster than selling more would.

What counts as fixed and what counts as variable

Fixed costs do not change with the number of sales in the period: rent, salaries and visas, trade licence and insurance spread over the year, accounting, software subscriptions and loan repayments. Variable costs rise with each sale: the product or raw materials, packaging, shipping, payment card fees, marketplace commission and any sales commission. Some costs are mixed, such as electricity in a workshop; split them as best you can. Spread yearly costs, such as a licence renewal, over twelve months so the monthly figure is honest.

Leave VAT out of the price

For a VAT-registered business, the VAT you collect belongs to the tax authority, not to you, so enter prices and costs before VAT. If your shop price of 105 includes 5% VAT, the price for this calculator is 100. A business that is not VAT-registered and pays VAT on its purchases without reclaiming it should include that VAT in its costs. For pricing a single product with fees and VAT in detail, the profit margin calculator does that step.

Margin of safety and using the result

If you enter the units you expect to sell, the calculator shows the profit at that level and the margin of safety: how far sales can fall before you make a loss. Selling 500 units when you break even at 400 gives a margin of safety of 20%. A thin margin of safety means a slow month, a price war or a new competitor can push you into a loss. Break-even is a planning number for a period you choose; it does not include taxes on profit, owner drawings or the cash tied up in stock, so check your cash flow separately.

Frequently asked questions

What is the break-even point formula?

Break-even units = fixed costs ÷ (price − variable cost per unit). Break-even sales = fixed costs ÷ contribution margin ratio. With 12,000 fixed costs, a price of 80 and variable costs of 50, that is 400 units or 32,000 in sales.

How do I find break-even for a shop with many products?

Use your average gross margin. If goods cost 60% of the selling price, the gross margin is 40%, and fixed costs of 30,000 a month need 75,000 in sales to break even.

Why does the calculator say I can never break even?

Your variable cost per unit is equal to or higher than your price, so every sale loses money or makes nothing. Raise the price or cut the cost per unit first.

What is a good margin of safety?

There is no single rule, but the higher the better. A margin of safety of 20% means sales can fall by a fifth before you lose money; under 10% leaves little room for a slow month.

Should owner salary be part of fixed costs?

Yes, if you want the break-even point to pay you as well. Include a fair monthly salary for yourself; otherwise breaking even only means the business covers its other costs.