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Break-even Calculator

Calculate the minimum monthly sales to avoid a loss, helping you set minimum sales targets and inventory decisions.

Input Parameters
125
Break-even Sales (units/mo)
$4,750
Break-even Revenue
$16.00
Unit Contribution Margin
💡 Contribution Margin = Price − Variable Cost. Fixed Costs ÷ Contribution Margin = Break-even Sales.
Target Profit Calculation
188
Sales Needed for Target Profit
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Before you launch a product, you need to know the minimum number of units you must sell each month to avoid losing money. That number is your break-even point, and this free break-even calculator makes it instant to find. Enter your monthly fixed costs—rent, software, salaries, and overhead—your unit selling price, and your unit variable cost, and the calculator applies the standard contribution margin formula to reveal exactly how many units and how much revenue you need to cover all expenses. Whether you are building a business plan, evaluating a new warehouse lease, or deciding whether to hire your first employee, understanding your break-even point is the foundation of sound financial decision-making.

The Break-Even Formula and How It Works

The break-even point in units is calculated as: Break-even Units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit). The denominator—Selling Price minus Variable Cost—is called the contribution margin per unit. It represents the amount each sale contributes toward covering fixed costs after paying for the direct costs of producing and delivering that unit. For example: if your monthly fixed costs are $5,000, your selling price is $40, and your variable cost per unit is $20, your contribution margin is $20 and your break-even point is 250 units per month. Sell fewer than 250 units and you run at a loss; sell more and you generate profit at $20 per additional unit. Break-even analysis in dollars simply multiplies the unit break-even by your selling price—in this example, $40 × 250 = $10,000 monthly revenue.

Fixed vs. Variable Costs: Knowing the Difference

The accuracy of your break-even calculation depends entirely on correctly categorizing costs. Fixed costs do not change with production or sales volume: monthly warehousing fees, software subscriptions (inventory management, ERP, design tools), team salaries, insurance, and any minimum platform fees. Variable costs change directly with each unit sold: product cost, per-unit freight, FBA fulfillment fee per unit, per-unit packaging materials, and credit card or platform transaction fees expressed per unit. Some costs are semi-variable—for example, advertising spend is partially fixed (minimum brand-building budget) and partially variable (PPC scales with sales). A practical approach for break-even analysis is to include your baseline monthly advertising budget in fixed costs and your average cost-per-sale from PPC in variable costs. Miscategorizing even one large cost item can shift your break-even point by hundreds of units, leading to false confidence or unnecessary caution.

Using Break-Even Analysis to Set Sales Targets and Evaluate Decisions

Break-even analysis is most powerful as a decision-making tool rather than a passive tracking metric. When evaluating a new product, compare the break-even volume against realistic demand estimates from keyword research and competitor analysis—if your break-even requires 400 units per month but comparable listings sell 150, the economics may not support the launch. When evaluating cost changes—a new supplier quote, a warehouse upgrade, or an additional team member—calculate how the change shifts your break-even point and the corresponding revenue increase required to maintain profitability. The Target Profit feature in this calculator extends break-even analysis to planning: enter a monthly profit target and the calculator shows the additional unit volume required beyond break-even. Use this to set quarterly sales goals that your cost structure can actually support. Combine with our Profit Calculator for per-unit economics and the Inventory Turnover Calculator to ensure your cash is cycling fast enough to sustain the required volume.

How to Use the Break-Even Calculator

  1. Enter your total monthly fixed costs—include rent or warehouse fees, software, salaries, insurance, and any recurring overhead that does not change with sales volume.
  2. Enter the unit selling price you plan to charge after any standard discount.
  3. Enter the unit variable cost—the total direct cost of producing and delivering one unit, including product cost, shipping, and platform fee per unit.
  4. The calculator immediately shows your break-even in units per month and in monthly revenue. If the volume seems achievable, your economics are viable.
  5. Enter a target monthly profit in the Target Profit section to see how many additional units above break-even you need to sell to hit your profit goal.

Frequently Asked Questions

What is contribution margin and why does it matter?
Contribution margin per unit is the selling price minus the variable cost per unit. It is the amount each sale 'contributes' toward covering your fixed costs. Once total contributions from all units sold equal your fixed costs, you have broken even. Every unit sold after that contributes directly to profit. A higher contribution margin means fewer units are required to break even, giving your business more resilience against demand fluctuations.
Should I include Amazon FBA fees as a fixed or variable cost?
FBA fulfillment fees should be included as a variable cost because they are charged per unit shipped. Include the FBA fee in your unit variable cost field along with product cost and per-unit inbound freight. Monthly storage fees at Amazon are semi-fixed (they do not scale directly with sales volume but do increase with inventory size), so including them in your fixed costs is typically the more conservative and accurate approach.
My break-even point seems very high—what should I do?
A high break-even point typically points to one of three issues: fixed costs are too high relative to the contribution margin, the contribution margin is too low (often because variable costs are high or pricing is too aggressive), or both. Review each fixed cost line and eliminate or defer any that are not immediately necessary. Then look at whether a price increase—even 5–10%—would meaningfully raise your contribution margin without destroying conversion. If neither is feasible, the product or business model may need reconsidering before committing to inventory.
How is break-even different from profit margin?
Break-even is a volume threshold—it tells you how many units you must sell per period to cover all costs. Profit margin is a ratio—it tells you how efficiently you convert revenue into profit at your current volume. You can have a healthy profit margin per unit but still run at a net loss if your fixed costs are high and volume is insufficient. Break-even analysis tells you whether your cost structure is viable at realistic demand levels; profit margin tells you how rewarding each sale is once you exceed break-even.
Does break-even analysis account for taxes?
This calculator does not include taxes because tax treatment varies significantly by jurisdiction and business structure. For a pre-tax break-even analysis (the most common approach for operational planning), the results are accurate as shown. For post-tax analysis, divide your net profit target by (1 − effective tax rate) before entering it in the Target Profit field. For example, if you want $3,000 after a 30% tax rate, enter $4,286 as your target profit ($3,000 ÷ 0.70).

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