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Find your "Survival Number." Calculate exactly how many units you must sell to cover your fixed costs and reach $0 net profit.
Step-by-step breakdown of your unit economics break-even threshold.
Each unit you sell contributes $30.00 toward covering your fixed costs. Once you cross the 167 unit mark, every additional sale is pure profit (minus variable cost).
The Break-Even Calculator determines exactly how many units you need to sell to cover all your costs—the point where revenue equals total expenses and profit is zero. This is your "survival number"—sell fewer and you lose money; sell more and you generate profit.
Understanding your break-even point is fundamental to pricing strategy, investment decisions, and business planning. It answers the critical question: "Is this business viable at my current cost structure and pricing?"
Scenario: A coffee shop has $5,000/month in fixed costs (rent, utilities, salaries). Each coffee costs $2 to make (variable cost) and sells for $5.
Insight: Every coffee beyond #1,667 generates $3 pure profit. Selling 2,000 coffees means $999 monthly profit.
Planning tip: Add a safety margin. If break-even is 1,000 units, target 1,200-1,500 to ensure profitability even if sales fluctuate.
Contribution margin is the selling price minus variable cost per unit—the amount each sale 'contributes' toward covering fixed costs. If your product sells for $50 and costs $20 to make, the $30 contribution margin covers rent, salaries, and other fixed expenses. Higher contribution margins mean fewer sales needed to break even.
Three main strategies: (1) Reduce fixed costs—negotiate rent, cut unnecessary subscriptions, automate tasks. (2) Increase prices—if your market supports it, even a small price increase drops directly to contribution margin. (3) Reduce variable costs—find cheaper suppliers, improve production efficiency, or redesign products.
A negative contribution margin means you lose money on every unit sold—you can never break even no matter how much you sell. This is a critical business problem requiring immediate action: raise prices, reduce variable costs, or discontinue the product. Operating this way leads to faster losses with more sales.
Use the same time period you want to analyze. For monthly break-even, use monthly fixed costs (rent/12, annual subscriptions/12). For annual planning, sum all yearly fixed costs. Just be consistent—monthly fixed costs give monthly unit requirements.
By testing different prices, you can see how they affect your break-even point. A 10% price increase might reduce required units by 20% or more, while a 10% price cut to gain volume might require selling 30%+ more units. This helps you find the profit-maximizing price point.