Your break-even is the point where contribution margin covers your fixed costs.
A break-even calculator finds how many units you must sell to cover your costs, the point where total revenue equals total costs and profit is zero. It's a foundational number for pricing, planning, and deciding whether a product is viable.
Break-even hinges on three things: fixed costs that don't change with volume (rent, salaries, insurance), variable costs that rise with each unit (materials, shipping), and your price. The gap between price and variable cost per unit is the contribution margin, what each sale contributes toward covering fixed costs. Break-even units = fixed costs ÷ contribution margin per unit; below that you lose money, above it you profit.
The break-even point is a fast reality check: if the volume needed looks unrealistic for your market, the price is too low, the costs too high, or the product isn't viable as designed. It also shows the levers, raising the price or cutting variable cost widens the margin and lowers the break-even count faster than trimming fixed costs. Add a target profit to the fixed costs to find the volume needed to earn, not just survive.
Divide total fixed costs by the contribution margin per unit (price minus variable cost). The result is the units you must sell to cover all costs.
The price of a unit minus its variable cost, the amount each sale contributes toward fixed costs and, past break-even, toward profit.
Raise the price, cut the variable cost per unit, or reduce fixed costs. Widening the contribution margin lowers the units needed fastest.
See the exact formula and a worked example on our methodology page.