Softonic

Break-Even Calculator

Step 1 / 3 Break-even units
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Break-even is the point where revenue exactly covers costs — sell one more unit and you start making profit. Enter fixed costs, variable cost per unit and selling price, and the calculator returns units to break even, revenue to break even, contribution margin ratio and a sensitivity table showing how the break-even shifts if any input moves 10% in either direction.

How break-even is calculated

  1. 1

    Enter fixed costs

    Rent, salaries, software, insurance — anything that stays the same regardless of how many units you sell.

  2. 2

    Enter variable cost per unit

    Materials, shipping, payment processing, per-unit commissions — everything that scales with volume.

  3. 3

    Enter selling price per unit

    Net of discounts and VAT if you want pre-tax break-even; gross if you prefer including tax.

  4. 4

    Read the results

    Break-even in units = Fixed / (Price − Variable). Break-even in revenue = units × price. Contribution margin shows what each sale contributes to fixed cost recovery.

The formula

Break-even units = Fixed costs / (Price per unit − Variable cost per unit)

The denominator is the contribution margin per unit — what each sale contributes toward covering fixed costs. Once cumulative contribution margin equals fixed costs, you break even.

Worked example: coffee shop

  • Fixed monthly costs: rent $3,000 + staff $6,000 + utilities $500 = $9,500
  • Variable cost per cup: beans + milk + cup $0.75
  • Selling price: $4.50

Contribution margin = $4.50 − $0.75 = $3.75 per cup

Break-even cups per month = $9,500 / $3.75 ≈ 2,534 cups

Revenue to break even = 2,534 × $4.50 ≈ $11,403 per month

At 30 days open, that’s 85 cups/day — a realistic lunchtime rush.

Contribution margin ratio

CM ratio = (Price − Variable) / Price

For the coffee shop: 3.75 / 4.50 = 83%. Every $1 of revenue contributes $0.83 toward fixed cost and profit. Break-even revenue = Fixed / CM ratio = $9,500 / 0.83 = $11,446.

Levers to lower break-even

  • Raise price: biggest single impact, but price-elasticity limits how far.
  • Cut variable cost: better supplier terms, cheaper materials.
  • Reduce fixed cost: smaller space, leaner staff, shared services.
  • Add a second revenue stream that shares the fixed base (pastries, merchandise) — increases effective contribution on the same rent.

What break-even ignores

  • Time value of money — a 12-month break-even on $100k of startup capital is worse than a 3-month one.
  • Risk — the assumptions are deterministic; real variable cost varies, real price gets discounted.
  • Opportunity cost — breaking even is necessary but not sufficient; it does not account for what else the capital could earn.

Frequently Asked Questions

Fixed costs do not change with unit volume (rent, software subscriptions, full-time salaries). Variable costs scale per unit (materials, shipping, hourly wages tied to production). Some costs are mixed — split them into their fixed and variable portions.

Use the weighted-average contribution margin across products, weighted by expected sales mix. The calculator supports up to five products with individual prices and variable costs.

Most operational break-even analyses use pre-tax, pre-interest figures (EBIT basis). For a true cash break-even, include interest on business debt but not income tax — income tax only applies above break-even.

You lose money on every sale — there is no break-even point. Raise price or cut variable cost before investing in volume; scaling negative margins just scales losses.

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