Break-even calculator

Find how many sales you need each month to cover your costs, and how many to reach the profit you want.

Your break-even point is the number of sales at which you have covered every cost and the profit is exactly zero. Below it you lose money, above it you earn.

Fixed costs do not change with sales: rent, salaries, insurance, subscriptions. Variable costs rise with every item you sell: what you pay for the stock, packaging, card fees. Each sale then contributes its price minus its variable cost towards the fixed costs.

For a shop that sells many products, use the average price and average cost, or run the calculator for your typical basket. Add the number of days you are open to see how many sales you need each day.

The formulas

• Contribution per unit = selling price − variable cost per unit
• Break-even units = fixed costs ÷ contribution per unit
• Break-even revenue = break-even units × selling price
• Units for a profit target = (fixed costs + target profit) ÷ contribution per unit

A worked example

Fixed costs (rent, wages, utilities) are 3,000 a month. You sell an item for 25 and it costs you 15, so each sale contributes 10. Break-even is 3,000 ÷ 10 = 300 items, or 7,500 in sales. To also earn 2,000 a month you need (3,000 + 2,000) ÷ 10 = 500 items.

Frequently asked questions

What is the break-even point?

It is the amount you must sell for your income to equal your costs. At that point you make no profit and no loss. Every sale beyond it adds profit.

How do I calculate break-even units?

Divide your fixed costs by the contribution per unit, which is the selling price minus the variable cost. With 3,000 of fixed costs and a contribution of 10, break-even is 300 units.

What counts as a fixed cost and what as a variable cost?

Fixed costs stay the same however much you sell, such as rent, salaries and insurance. Variable costs change with each sale, such as the cost of the goods, packaging and payment fees.

Why does it say my numbers cannot break even?

If the cost of each unit is as high as or higher than its price, every sale loses money or earns nothing, so more sales never cover the fixed costs. Raise the price or cut the unit cost.

How can I lower my break-even point?

Raise prices, cut the cost of goods, reduce fixed costs, or shift sales towards products with a higher margin. Even a small gain in contribution per unit lowers the units you need.