Break-Even Calculator

Input guidance

Enter amounts, rates, terms, and timing assumptions, run the baseline case, then compare the result with fees, taxes, provider terms, and a downside scenario.

How to use this tool

1. Enter fixed costs, variable cost per unit, and selling price per unit.
2. Run the calculator to get break-even units and revenue.
3. Test alternate price/cost assumptions to compare risk and margin room.

Formula or method

• Contribution margin per unit equals price per unit minus variable cost per unit.
• Break-even units equal fixed costs divided by contribution margin per unit.
• If contribution margin is zero or negative, the offer cannot break even under the entered price and cost assumptions.

Worked example

Checking a new product launch target

• Fixed costs: $12,000
• Variable cost per unit: $20
• Price per unit: $50

Result: Contribution margin is $30 per unit, so break-even volume is 400 units and break-even revenue is $20,000.

If 400 units is unrealistic, the team needs a lower fixed-cost plan, a higher price, lower variable cost, or a different launch target.

How to interpret the result

Read break-even as the point where the modeled offer stops losing money before financing, taxes, and wider overhead allocation.

• A lower break-even point usually means more room for demand uncertainty.
• Price changes affect both contribution margin and market demand, so do not optimize the formula alone.
• Use scenario comparisons for conservative, expected, and optimistic sales volumes.

Common mistakes

• Using gross margin when contribution margin is the relevant metric.
• Leaving out payment fees, fulfillment, support, discounts, or returns from variable cost.
• Treating break-even as profit target rather than the zero-profit threshold.

Assumptions

• Fixed costs remain fixed over the modeled sales range.
• Variable cost per unit and selling price stay constant.
• The model uses one product or an average unit economics assumption.

FAQ