Find the exact number of units and revenue needed to cover all your costs and reach profitability.
Enter your monthly fixed costs, the variable cost per unit you sell, and your selling price per unit. You can also enter your expected monthly sales volume to see your current profit or loss relative to the break-even point.
Fixed costs stay the same regardless of how many units you sell — rent, insurance, salaries, software subscriptions. Variable costs change with volume — raw materials, packaging, shipping, sales commissions.
The contribution margin is the amount each unit sold contributes toward covering fixed costs and generating profit. A higher contribution margin means you reach break-even with fewer sales and generate more profit per unit beyond break-even.
If your contribution margin is thin (say, below 20%), you're very sensitive to price changes and cost increases. Businesses with high contribution margins (SaaS, digital products) can often reach profitability much faster than manufacturing businesses with high variable costs.
Break-Even Units = Fixed Costs ÷ (Selling Price − Variable Cost Per Unit). This is also expressed as Fixed Costs ÷ Contribution Margin Per Unit. To find break-even revenue, multiply break-even units by the selling price.
It depends heavily on the industry. Software and digital products often have contribution margins above 70–80%. Retail businesses might have 30–50%. Manufacturing businesses 20–40%. Food service can be as low as 10–20%. The key is whether your contribution margin, multiplied by expected volume, is enough to cover your fixed costs and provide a reasonable profit.
You can lower your break-even point by: (1) raising your selling price — even small price increases have a big impact on contribution margin; (2) reducing variable costs by renegotiating supplier contracts or improving operational efficiency; (3) cutting fixed costs by eliminating unnecessary overhead; or (4) shifting fixed costs to variable costs (e.g., commission-based sales vs. salaried salespeople).