See how many units you must sell to cover your costs — from fixed costs, your price, and the variable cost per unit.
Break-even ignores taxes and assumes a constant price and unit cost. Above break-even each unit's contribution margin is profit. Estimate only.
Each unit you sell contributes its price minus its variable cost toward fixed costs — the contribution margin. Divide total fixed costs by that margin and you have the number of units where you stop losing money and start making it.
Break-even units = fixed costs ÷ (price − variable cost per unit)
Break-even is the sales volume at which total revenue exactly equals total cost, so profit is zero. It splits costs into two kinds. Fixed costs — rent, salaries, software, insurance — are paid whether you sell one unit or a thousand. Variable costs — materials, packaging, shipping, payment fees — arrive with each unit sold. What each sale leaves after its own variable cost is the contribution margin, and that is what pays the fixed bill. Divide fixed costs by the contribution margin per unit and you have the number of units that clears the bill. The model ignores taxes, assumes price and unit cost stay constant at any volume, and assumes you sell everything you make; each of those is roughly true for a small business over a short period and less true the further you stretch it.
Fixed costs of $5,000, a price of $40 and a variable cost of $15 per unit. Contribution margin per unit is $40 − $15 = $25. Break-even units are $5,000 ÷ $25 = 200 units, and break-even revenue is 200 × $40 = $8,000. The contribution margin ratio is $25 ÷ $40 = 62.5%, which is the shortcut: 62.5 cents of every dollar of sales goes toward fixed costs until they are covered, and toward profit after that. Selling 250 units, then, earns 50 × $25 = $1,250 of profit before tax.
| Change | Contribution / unit | Break-even units |
|---|---|---|
| Defaults | $25.00 | 200 |
| Cut price to $35 | $20.00 | 250 |
| Raise price to $45 | $30.00 | 167 |
| Fixed costs rise to $6,000 | $25.00 | 240 |
A $5 price cut raises the target by 25%; a $5 price rise lowers it by a sixth. Price moves break-even far harder than most owners expect because it changes the margin on every unit, whereas a fixed-cost change only shifts the bill.
Break-even is a single point; a business is a moving one. Once you have several products with different margins, or costs that step up when you hire, the honest tool is a monthly sheet that tracks actual units, revenue and costs against the break-even line and recomputes it as fixed costs change. Our Small Business Bookkeeping workbook keeps fixed and variable spend separated by category so the contribution margin on the dashboard is real rather than remembered, and the break-even (dollars) calculator runs the same logic from a margin ratio when you sell many products at once.
If price doesn't exceed variable cost, you lose money on every sale and can never break even — raise the price or cut the unit cost first.
Cut fixed costs, raise price, or reduce variable cost per unit. Each one shrinks the number of units you need.
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It uses standard formulas and recalculates the moment you change a value, so the math is exact for the inputs you enter. Treat the result as a reliable planning estimate; for decisions with legal or tax consequences, confirm the figures with a qualified professional.
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Last reviewed: September 2026. Free to use, no signup — Break-Even Units Calculator by ToolWise Digital.
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