Your break-even point is the number of sales where revenue exactly covers costs, so you are making neither a profit nor a loss. Knowing it tells you whether a price, a new product or a new hire is realistic before you commit to it.
How it works
Each sale brings in its price and costs you its variable cost. The difference is the contribution per unit: the amount each sale contributes toward your fixed costs.
Divide your fixed costs by the contribution per unit to get the break-even point. Since you cannot sell part of a unit, the calculator rounds up to the next whole unit.
To reach a profit target, add the target to your fixed costs before dividing. If the price does not exceed the variable cost, every sale loses money and there is no break-even point, so the calculator shows n/a.
A worked example
With $5,000 of fixed costs a month, a $50 price and a $30 variable cost, each sale contributes $20. You need 250 sales a month to break even, which is $12,500 of revenue. To make a $2,000 profit, you need 350 sales.
Questions people ask
What counts as a fixed cost?
Anything you pay regardless of how much you sell in the month: rent, salaries, software subscriptions, insurance and loan repayments. If a cost rises with each extra sale, such as materials or card processing fees, it is a variable cost.
Is it better to raise prices or cut costs to break even sooner?
Try both in the calculator. A price rise increases the contribution from every sale, so it often moves the break-even point more than the same cut in variable costs. It may also reduce how many units you sell, which the calculator cannot predict.
Can I use this for a service business?
Yes. Treat one unit as one billable hour, project or subscription. The variable cost is whatever each one costs you directly, such as contractor time or payment fees.