Analysis & valuation
How many sales cover the rent and payroll? A break-even calculator
A break-even calculator for small business owners: enter fixed costs, price and variable cost per unit to see break-even units, break-even revenue and contribution margin.
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How do you calculate a break-even point?
Divide total fixed costs by the contribution margin per unit, which is price minus variable cost. With $30,000 of monthly fixed costs and a $15 margin on a $40 item, the business needs 2,000 units, or $80,000 of sales, a month to break even. Every unit above that adds $15 of profit.
Setting prices or budgets for the year
Owners ask when setting prices, opening a location, hiring or after costs jump. They know their rent and payroll; they want to know what it takes to cover them before committing.
What the client types into a search box
“how many sales do I need to break even”
How a client works through it
Enter fixed costs
Rent, salaries, insurance and other costs that don't change with volume.
Enter price per unit
The selling price.
Enter variable cost per unit
Materials, commissions and other per-unit costs.
See break-even
Units, revenue, contribution margin per unit and percentage.
What lands in your inbox
When a client asks your firm to review the result, the request arrives as a contact record with their inputs and results attached, by email and, on paid plans, by webhook to your CRM.
Received
Fixed costs, price and variable cost show the business's scale and margin. A thin contribution margin suggests pricing or cost work; high fixed costs relative to sales suggest risk worth discussing.
What contribution margin tells an owner
Contribution Margin / Unit is what each sale contributes toward fixed costs and profit; Contribution Margin % expresses it as a share of price. Break-Even Units and Break-Even Revenue show the sales needed to cover fixed costs.
Raising price or cutting variable cost moves break-even down faster than most owners expect.
Results shown: Break-Even Units · Break-Even Revenue · Contribution Margin / Unit · Contribution Margin %.
A $40 product with a $25 cost
Price $40, variable cost $25, so margin is $15, a 37.5% contribution margin. With $30,000 of fixed costs: $30,000 ÷ $15 = 2,000 units, or 2,000 × $40 = $80,000 of revenue to break even.
Why break-even analysis opens advisory work
Break-even is the first management-accounting question most owners ask, and answering it with their numbers shows the value of advice beyond compliance. Bookkeepers can link it from monthly reports; CPA firms and fractional CFOs can use it to start pricing and budgeting engagements.
The request reveals cost structure, margins and the decision being weighed.
Follow-ups this request opens
- Build a monthly budget with break-even tracking
- Review pricing and product mix
- Classify costs correctly as fixed or variable
- Model the impact of a new hire or location
What this calculator leaves out
- Assumes constant price and variable cost.
- Single-product model; mixes need weighted margins.
- Fixed costs assumed not to change with volume.
- No taxes or financing costs.
Platform disclaimer shown under the calculator: Estimates only. A real break-even analysis depends on accurate cost classification and may change with volume. Use as a planning guide.
Compliance note for firms
Business planning tools aren't attest or assurance services. If a CPA firm attest client uses the tool, keep advisory work within independence rules. Present outputs as planning estimates.
Not legal advice. See our disclaimer and the guide to compliance for client calculators.
Terms your client sees in the calculator
These definitions appear in the calculator's collapsible Definitions block, so clients don't have to call to ask what a label means.
- Break-even point
- The sales volume at which total revenue equals total costs, so profit is zero. This calculator finds it by dividing fixed costs by the contribution margin per unit and rounding up to a whole unit. Every unit sold beyond it adds its contribution margin to profit; every unit short of it leaves a loss.
- Fixed costs
- Costs that stay the same regardless of how many units you sell within a normal range, such as rent, salaries, insurance and loan payments. They must be covered before any profit appears. Enter them for the same period you want the break-even figure for, since a monthly total gives a monthly break-even.
- Variable cost per unit
- The cost that rises with each additional unit produced or sold, such as materials, direct labor, packaging, shipping and payment processing fees. It is subtracted from the price to get the contribution margin. Misclassifying a cost as fixed or variable is the most common source of error in a break-even estimate.
- Price per unit
- What you charge a customer for one unit, net of discounts. Raising the price increases the contribution margin and lowers the break-even volume, though it can also reduce demand, which this calculator does not model. If the price is at or below the variable cost, there is no break-even point.
- Contribution margin per unit
- Price per unit minus variable cost per unit: the amount each sale contributes toward covering fixed costs and, after that, toward profit. A $40 item that costs $25 to make has a $15 contribution margin. The larger it is, the fewer units you need to sell to break even.
- Contribution margin ratio
- Contribution margin per unit divided by price, expressed as a percentage. It shows how many cents of each sales dollar are left to cover fixed costs after variable costs. A $15 margin on a $40 price is 37.5%. Dividing fixed costs by this ratio gives the break-even revenue directly.
In our glossary: Break-even point · Contribution margin
Break-Even calculator: questions from firms and clients
What's a fixed cost?
A cost that doesn't change with sales volume in the short term, like rent.
What's a variable cost?
A cost that rises with each unit sold, like materials or commissions.
Can service businesses use it?
Yes, treat an hour or a project as the unit.
What if I sell many products?
Use a weighted average margin, or the firm can model the mix.
Does it include owner pay?
Include owner salary in fixed costs for a true break-even.
How do I add a profit target?
Use the contribution margin calculator.
Are taxes included?
No.
Which plan includes it?
Network. See pricing.
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Clients who ask this usually ask next
Contribution Margin & Break-Even
how many units do I need to sell to make a profit of
Profit Margin
what is a good profit margin for my business
Cash Flow Budget
how do I make a cash flow budget for my business
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