Checked 15 October 2026. What was checked. How these pages are maintained.
Break-even formula
Contribution per unit = price − variable cost. Break-even units = fixed costs ÷ contribution. At $25 price and $9 cost, each sale contributes $16. $4,000 of rent needs 250 sales to break even. After that, each extra unit is contribution toward profit.
This ignores tax, inventory spoilage, and unpaid time. It is a planning number, not a guarantee.
Worked example
Fixed costs $12,000 a month, sell at $40, variable cost $16: contribution $24/unit. Break-even = 12,000 ÷ 24 = 500 units. At 600 units, profit is 100 × $24 = $2,400 before tax.
If you discount the price, contribution falls and you need more units. This ignores inventory, tax, and time. It is a planning sketch, not a cash-flow forecast.
The contribution on one sale
Fixed costs of $2,400, a price of $18, and a variable cost of $7 leave a contribution of $11 on every unit. Break-even units = 2,400 ÷ 11 = 218.18, and this page rounds up to 219 because you cannot sell a fraction of a unit to cover the last dollars. Revenue at 219 units is 219 × 18 = $3,942. That revenue is not profit. Profit starts on unit 220, at $11 a unit, before tax.
Drop the price to $15 for a promotion and the contribution falls to $8. Break-even becomes 2,400 ÷ 8 = 300 units. The discount did not only “give away $3.” It forced 81 more sales before the month covers rent. Raise the variable cost, a supplier increase, and the same thing happens from the other side.
Units are not cash
The page assumes every unit sells for the same price, costs the same to make, and is paid for when you count it. It ignores inventory that sits, a tax instalment, a late invoice, and your own unpaid time. If variable cost is equal to or above the price, there is no break-even and the page will say so. Fix the price or the cost before you look for a unit count. For a savings target that is a dollar date rather than a unit count, the savings goal calculator is the closer tool.
Common questions
What counts as a fixed cost?
Costs you pay even if you sell nothing: rent, insurance, base salary, software.
What if price is below cost?
There is no break-even. Raise price or cut variable cost.