Cost Structure
Enter your fixed and variable costs along with selling price
Break-Even Analysis
Break-Even Units
334
Units you need to sell to cover all costs
Break-Even Revenue
$8,350.00
Margin Per Unit
$15.00
Profit earned on each unit sold
Break-Even Chart
| Target Profit | Units Needed | Revenue |
|---|---|---|
| $100 | 340 | $8,500.00 |
| $500 | 367 | $9,175.00 |
| $1,000 | 400 | $10,000.00 |
| $5,000 | 667 | $16,675.00 |
| $10,000 | 1,000 | $25,000.00 |
When Does Your Business Start Making Money?
The break-even point is where total revenue equals total costs — no profit, no loss. Every unit sold beyond this point generates profit. Every unit below it means you're losing money. Our calculator finds your break-even point in units and revenue based on your fixed costs, variable costs per unit, and selling price.
Formula: Break-even units = Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit). If your fixed costs are $5,000/month, you sell products at $50 each, and each unit costs $20 to produce, your break-even is 167 units/month ($8,333 in revenue).
Understanding Fixed vs. Variable Costs
Fixed costs remain constant regardless of sales volume: rent, salaries, insurance, loan payments, software subscriptions. These costs exist even if you sell zero units. For service businesses, fixed costs might include your monthly tools, workspace, and base salary you pay yourself.
Variable costs change with each unit sold: materials, shipping, payment processing fees, commissions, packaging. A t-shirt business might have $8 in materials, $3 in printing, and $2 in shipping per shirt — $13 total variable cost per unit.
Contribution margin is the difference between selling price and variable cost per unit. It represents how much each sale contributes toward covering fixed costs. Once fixed costs are fully covered (break-even), the entire contribution margin becomes profit. A product sold at $50 with $20 in variable costs has a $30 contribution margin — 60% of revenue.
Break-Even for Different Business Types
Product businesses calculate break-even straightforwardly using the unit formula. A coffee shop with $8,000/month in fixed costs selling $5 lattes with $1.50 in ingredients breaks even at 2,286 lattes/month (76/day).
Service businesses often calculate break-even in hours or clients. A freelancer with $3,000/month in expenses (including taxes and benefits) charging $100/hour breaks even at 30 billable hours/month. Everything beyond 30 hours is profit.
SaaS businesses calculate break-even using monthly recurring revenue (MRR) against burn rate. A startup spending $15,000/month with $50/month subscriptions breaks even at 300 customers — but must also account for churn (customers leaving each month).
E-commerce adds complexity with variable costs including payment processing (2.9% + $0.30), marketplace fees (15% on Amazon), shipping, and returns. A $40 product with $12 in COGS, $6 in Amazon fees, $5 in shipping, and $1.46 in payment processing has a contribution margin of only $15.54 — requiring significantly more sales to break even than the COGS alone suggests.
Frequently Asked Questions
The break-even point is the sales volume at which total revenue equals total costs. At this point, you're neither making nor losing money. Every sale beyond break-even generates profit. Knowing your break-even point helps you set sales targets, price products, and evaluate business viability.
Three strategies: reduce fixed costs (negotiate rent, cut unnecessary subscriptions), reduce variable costs per unit (find cheaper suppliers, optimize production), or increase your selling price. Any combination of these lowers the number of units needed to break even.
Contribution margin is selling price minus variable cost per unit. It's the amount each sale “contributes” toward covering fixed costs. Once fixed costs are covered, the contribution margin becomes pure profit. A higher contribution margin means you break even faster with fewer sales.
Divide your total monthly fixed costs (including the salary you need to pay yourself) by your hourly rate or average project fee. If you need $5,000/month and charge $150/hour, your break-even is 33.3 billable hours/month. Factor in your realistic utilization rate — if you bill 70% of your work hours, you need 47.6 total work hours to break even.
No — break-even is the zero-profit point. To include a target profit, add your desired monthly profit to fixed costs before calculating. If fixed costs are $5,000/month and you want $3,000/month profit, use $8,000 as your target, then divide by contribution margin per unit.
This varies by industry and business type. Physical product businesses often target break-even within 12–18 months. SaaS startups may take 18–36 months. Restaurants typically need 2–3 years. Service businesses with low overhead can break even within 1–3 months. The key is having sufficient capital (runway) to sustain operations until break-even is reached.
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