How to find your break-even point
- Enter your Fixed costs for the period: rent, salaries, insurance and anything else you pay whatever you sell.
- Enter the Price per unit and the Variable cost per unit (materials, packaging, shipping, card fees).
- Read the units and sales needed to break even. Add a Target profit to see the units needed to make it. The table shows profit or loss at other volumes.
Fixed and variable costs
The analysis only works if your costs are in the right group. Fixed costs stay the same whether you sell one unit or a thousand within the period: rent, salaries, software, insurance, loan payments. Variable costs rise with each unit sold: materials, packaging, shipping, sales commission and payment fees. Use the same period for fixed costs and sales, such as a month or a year.
Using the break-even point
The break-even point tells you the least you need to sell to avoid a loss. Compare it with what you sell now or expect to sell. If it’s close to your best month, small changes help: in the example, raising the price from 50 to 55 lifts the contribution to 25 and cuts the break-even point from 500 to 400 units. Cutting fixed costs by 2,000 does the same. The markup calculator helps set the price, and the ROI calculator shows the return once you’re past break-even.