How to use
- Enter your fixed costs for a period — usually a month. These are costs you pay no matter how much you sell: rent, salaries, software, insurance.
- Enter the price per unit and the variable cost per unit — what each sale costs you in materials, packaging, shipping and payment fees. The break-even units and revenue appear instantly.
- Add an expected sales volume to see the profit and margin of safety at that level, or a target profit to see how many units it takes.
- The table shows profit at several volumes around the break-even point.
Formulas
| Item | Formula |
|---|---|
| Contribution margin per unit | price − variable cost per unit |
| Contribution margin ratio | contribution margin ÷ price × 100 |
| Break-even units | fixed costs ÷ contribution margin per unit, rounded up |
| Break-even revenue | fixed costs ÷ contribution margin ratio |
| Profit | units × contribution margin − fixed costs |
| Units for a target profit | (fixed costs + target profit) ÷ contribution margin per unit |
| Margin of safety | (expected units − break-even units) ÷ expected units × 100 |
The contribution margin is what each sale leaves over to cover fixed costs. Once fixed costs are covered you have reached break-even, and every unit after that is profit.
Example
A small online store with 8,000 a month in fixed costs, selling at 40 with a variable cost of 15 per unit:
| Item | Result |
|---|---|
| Contribution margin / ratio | 25 / 62.5% |
| Break-even | 320 units, or 12,800 in revenue |
| Profit at 500 units | 4,500 (margin of safety 36%) |
| Units for a 5,000 monthly profit | 520 |
Cutting the variable cost from 15 to 12 raises the contribution margin to 28 and lowers break-even to 286 units.
Things to keep in mind
- Results are for reference only. The model assumes the price and variable cost stay the same at every volume and that everything you make is sold. Discounts, spoilage and volume pricing all shift the real numbers.
- If your prices include sales tax or VAT, enter amounts without the tax.
- Profit here is before income tax.
- To check the margin on a single product, use the margin calculator.
FAQ
How do I split fixed and variable costs?
If you would still pay it after selling nothing, it is fixed. If it grows with each sale, it is variable. Turn percentage fees, such as a 3% card fee, into an amount per unit and add it to the variable cost.
Why is there no break-even point?
When the price is at or below the variable cost, every sale loses money, so fixed costs can never be covered. Raise the price or cut the variable cost.
Is anything I enter saved or sent anywhere?
No. All calculations run in your browser.