Business calculators
Break-Even Calculator
Find the sales volume and revenue needed to cover fixed and variable costs. Your inputs stay in this browser.
Live calculator
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What this calculator measures
Break-even analysis answers a commitment question: how many sales must land before contribution covers the costs that do not move with each unit. It is the right tool before you sign a lease, hire a packer, or resign a salaried job on the strength of a few good months.
The metric is misleading when the sales mix is not the unit you modeled. A studio that breaks even at 12 brand packages does not break even at 12 hourly tweaks with a third of the contribution. It is also misleading in cash terms: 500 units booked on Net 45 can show accounting break-even in June and an empty account in June. Taxes, inventory pre-buys, and owner's pay you still need to live on are often left out of fixed costs, which makes the unit target look easier than the life attached to it.
The common manual mistake is to divide fixed costs by selling price instead of by contribution. $10,000 of rent and tools divided by a $50 price suggests 200 units. If variable cost is $30, contribution is $20 and the real target is 500 units. Planning against 200 is how a shop runs out of cash while hitting its unofficial goal.
Chris teaches weekend workshops at $180 a seat. Room rental, insurance, and ads that do not change with headcount are $2,700 a month. Workbooks and payment fees are $35 per seat. Contribution is $145. Break-even is $2,700 ÷ $145 ≈ 18.6 seats, so 19 seats and $3,420 of revenue. Last month Chris filled 14 seats, called it a good class, and covered the shortfall from a day job. The calculator does not say the class is a bad idea. It says 14 seats is not yet a replacement for the day job.
Formula
Inputs and variables
- Fixed costs
- Enter the money amount used by this formula.
- Price per unit
- Enter the money amount used by this formula.
- Variable cost per unit
- Enter the money amount used by this formula.
How to use the calculator
- Choose a display currency when money fields are present.
- Enter values that cover the same period, scope, and currency.
- Review the result, formula, and worked example before using the estimate in a decision.
- Change one assumption at a time to understand what drives the result.
Worked example
- 1Chris has $2,700 of monthly fixed costs. A seat sells for $180 and variable cost is $35.
- 2Contribution is $145 per seat. $2,700 / $145 ≈ 18.6 seats.
- 3Plan on 19 seats and $3,420 of revenue before the month covers those fixed costs.
How to interpret the result
Round fractional units up when you cannot sell a slice of a seat or a kit. Profit in this model starts only after the break-even volume. If price is not above variable cost, no finite volume works — cut cost or change the offer before you advertise harder.
Common mistakes and limits
- Dividing fixed costs by price instead of by contribution (price minus variable cost).
- Treating owner's living costs as optional in a pre-quit or sole-proprietor model.
- Using one product's contribution for a mix that is mostly a cheaper add-on.
- Ignoring whether you can physically deliver the break-even volume in the period.
Frequently asked questions
How many units do I need to sell to break even this month?
Divide the month's fixed costs by contribution per unit (price minus variable cost). If the result is 18.6 and you sell whole seats or kits, plan on 19. Then multiply by price if you think in revenue instead of units.
Does break-even mean I can quit my job?
Not by itself. A break-even volume is the sales required to cover the fixed costs you entered. If those costs omit health insurance, tax reserves, and the paycheck you still need, the unit target is too low for a resignation decision. Put the full monthly floor into fixed costs and compare the result with sales you have already collected, not verbal interest.
What if my variable cost is higher than my price?
Contribution is zero or negative, so no number of sales covers fixed costs. Every extra unit widens the hole. Raise the price, cut variable cost, or stop selling that unit until one of those changes.
Should I include my own salary in fixed costs?
If the question is can this practice replace my job or pay my rent, yes — treat the pay you need as a fixed cost even if an accountant would call it a draw. If the question is only whether the product covers rent and contractors, leave personal pay out and say so.
Why is my break-even revenue so much higher than my fixed costs?
Because part of every dollar of sales goes to variable cost. Fixed costs of $2,700 with $35 of cost on a $180 seat need $3,420 of revenue, not $2,700. The gap is the variable cost sitting inside those 19 seats.