Break-Even Calculator

Where $18,000 of fixed cost becomes 400 units, $32,000, and 24 days of the month

Break-evenThe sales volume at which total revenue exactly covers total costs — zero profit, zero loss. units and revenue are two views of one threshold. The real test of a plan is not the break-even number itself but how it compares against realistic demand: if break-even sits far above what you can plausibly sell, the price is too low, variable costs are too high, or the fixed-cost base needs trimming. Switch modes for service capacity, ecommerce fee structures, or a multi-product sales mix before treating any single-product estimate as final.

A product business has $18,000 per month of fixed costs, sells at $80, and pays $35 of variable cost per unit.

• Contribution margin = 80 − 35 = $45 per unit (a 56.25% contribution margin ratio).
• Break-even units = 18,000 ÷ 45 = 400 units.
• Break-even revenue = 400 × 80 = $32,000.
• For a $5,000 monthly profit target: (18,000 + 5,000) ÷ 45 = 511.1 → 512 units in practice.
• At an expected volume of 500 units: profit = 500 × 45 − 18,000 = $4,500, and the margin of safety is (500 − 400) ÷ 500 = 20%.

The reading: the plan is profitable at expected volume but lands just short of the $5,000 target (a $500 gap — about 12 more units), and sales can fall 20% before the month turns loss-making. The calculator loads these numbers by default.

That 20% is the margin of safety — the cushion between expected sales and break-even, (expected − break-even) ÷ expected. Under 10% is a very thin buffer, 10–25% moderate, above 25% healthier.

One threshold, four units of measure. At the expected 500-unit month — 16.7 units a day — that threshold is also a date on the calendar.

Break-even formulas

A thin-margin business and a fat-margin one at the same price cut

Break-even moves with the reciprocal of contribution margin, so a thin margin is more fragile to a discount than the headline percentage suggests. A is the 56.3%-margin example; B is a 4%-margin commodity structure.

The two rows where B reads “Not possible” matter: break-even can be impossible. Cut the $80 price by 5% or 10% and the $76.80 variable cost passes it, the contribution margin turns negative, and no volume breaks even. The calculator returns “Not possible” whenever variable cost per unit equals or exceeds the selling price.

A 5% discount costs structure A 40 extra units a month and costs structure B its business: the thinner the margin, the less price is yours to give away.

Everything the model holds fixed while you move that price:

• Built on the standard cost-volume-profit assumptions: constant prices and costs across the volume range.
• Contribution margin subtracts everything that scales with a sale — fees, commissions, shipping, refund allowances — not just COGS; it is not the same as gross margin.
• Multi-product results depend on the sales-mix assumption holding at every volume.
• Break-even units round up when fractional sales aren’t possible.

Marketplace and payment take-rates are variable costs

A platform take-rate behaves exactly like variable cost, so it belongs above the contribution line, not in overheads.

With no platform take-rate the same product breaks even at 400 units, so the channel decision is a break-even decision.

A plan subscription such as Shopify's monthly fee is fixed and belongs in the $18,000 while only the per-sale take-rate is variable — and Etsy and eBay charge on item plus shipping, so confirm your category and plan on a payout statement.

Ecommerce mode builds this in: platform, payment, packaging, shipping, refund allowance and ad cost all sit on top of the base variable cost. Dropshipping is the same shape with one substitution — enter the supplier cost as the variable cost, since there is no inventory being financed or held.

Rates checked against published fee schedules on 2026-09-01.

A 10% return rate adds 45 units to break-even, not 40

A refund does not merely remove revenue, it removes the contribution that was funding fixed costs, so break-even climbs faster than the return rate.

The 10% row is the receipt: contribution kept per gross sale falls from $45.00 to $40.50, break-even climbs from 400 units to 445, and those 45 extra units are 11.25% more volume bought by a 10% return rate. A refund allowance belongs in the variable cost box, not in overheads, because it scales with every sale you make.

The SKU that is 70% of the units and 20% of the contribution

With more than one product there is no single break-even, only a break-even for one assumed sales mix.

The accessory below is 70% of every 1,000 units sold and $4,200 of the $20,880 those units contribute.

Weighted contribution margin $20.88 per unit (46.3% of the blended $45.10 price), so the blended break-even is 863 units.

A shift toward the thin SKU raises break-even with no price or cost changing.

Working capital, and the break-even month that still runs out of cash

A bank cash-credit limit is not the cash available to draw. Drawing power is recalculated each month from a stock statement: closing stock at cost or market, whichever is lower, less a margin (commonly 25%), plus book debts under 90 days less a margin (commonly 40%), minus sundry creditors. A profitable month that converted stock into receivables which then aged past 90 days therefore reduces the money available to trade with, even as the P&L improves.

Selling on 30-45 day terms while paying suppliers within a week means every unit sold above break-even consumes cash before it produces any. A machinery term loan puts only its interest into fixed costs; the principal repayment leaves the bank account without entering the break-even calculation. In commodity trading, weight lost to drying between purchase and sale (2-4% on paddy bought at 16-18% moisture) is a variable cost that never appears on the purchase invoice.

Inventory purchases, customer payment delays, loan principal and tax instalments can all leave a profitable month short of money, so treat the figure above as one lens on a plan and never as a cash forecast.

Limitations to state before quoting a break-even figure from this page:

• Discounts, bulk pricing, and rising input costs bend the real curve — prices and costs are not actually constant.
• Does not fully model taxes, depreciation, financing, working capital, seasonality, or demand elasticity.
• Break-even profit does not always mean positive cash flow — payment timing and inventory purchases move cash separately.

This is a planning estimate, not bookkeeping. For the full revenue-to-net-profit picture see the profit margin calculator; to price from cost see the markup calculator.

Three other calculations also answer to the name break-even

None of them is the sales-volume arithmetic this page computes.

• Break-even ROAS — the return on ad spend at which a campaign stops losing money. That is a margin threshold on advertising rather than a volume, and it belongs in the break-even ROAS calculator.
• Refinance and mortgage-points break-even — the number of months a lower payment takes to recoup the closing costs that bought it. That is a time-based payback, which this tool does not calculate; the mortgage refinance calculator has it built in.
• A trade’s break-even price — the price a single position has to reach to cover spread, fees and commissions. One transaction against its own costs is not a business selling units against fixed and variable costs, so this page cannot answer it.

“How many do I have to sell?” is this calculator. “How many months until this pays for itself?” is a payback calculation, and a payback answer read off a break-even volume will be wrong in both directions.

Related calculators

Break-even answers “how much must I sell?” — these tools take the next questions:

More in Business, or browse all calculators.

Read the guide

For how margin, markup, and break-even relate to each other, with worked examples, see Profit Margin vs Markup vs Break-Even: The Difference Explained.

Sources and methodology

Break-even here is arithmetic on the fixed costs, price and variable cost you enter. Nothing is fetched: no industry cost data, no interest rates, no bank drawing-power rules. The bank cash-credit margins quoted in the working-capital section are the conventional percentages Indian lenders commonly apply to stock and to book debts under 90 days; they are set in each borrower facility letter, not by a regulator, so treat them as typical practice and check your own sanction terms.

The sources below cover the four things defined by someone other than us: the cost-volume-profit identities, the fixed versus variable cost split, what counts as cost of goods sold, and the accounting-method timing that explains why a break-even month can still be cash-negative.

Links open in a new tab.

• Cost-volume-profit analysis - the contribution margin per unit and contribution margin ratio identities, the break-even and target-profit volume formulas, the margin of safety, and the constant-price constant-cost assumptions this page states as its limitationsAssociation of Chartered Certified Accountants (ACCA) · verified 2026-09-01
• Plan your business: break-even point - the fixed cost versus variable cost split that every figure here depends on, stated as small-business planning practice by the US small-business agencyU.S. Small Business Administration · verified 2026-09-01
• About Form 1125-A, Cost of Goods Sold - the official list of what counts as cost of goods sold, the practical test for which costs belong in the variable-cost-per-unit box rather than the fixed-cost boxInternal Revenue Service (IRS) · verified 2026-09-01
• Regulation S-X, 17 CFR 210.5-03 - the income-statement rule that separates costs applicable to sales from other operating costs, the filed-accounts equivalent of the variable versus fixed classification this calculator asks you to makeU.S. Securities and Exchange Commission, via GovInfo (U.S. GPO) · verified 2026-09-01
• Publication 538, Accounting Periods and Methods - accrual versus cash accounting and inventory timing, which is why a month can clear break-even on the P&L and still run out of cash, the point made in the working-capital section aboveInternal Revenue Service (IRS) · verified 2026-09-01