How many units — or dollars of sales — until your business stops losing money
Break-even is the first honest number in any business plan: the sales volume where revenue exactly covers costs, below which every month burns cash and above which every additional sale is profit. This calculator finds it precisely, then goes further — the sales needed for a target profit, your contribution margin, and the margin of safety in your current sales.
The denominator — price minus variable cost — is the contribution margin: what each sale contributes toward fixed costs (and after break-even, toward profit). Everything in break-even analysis flows from this one number.
| Fixed costs (paid regardless of volume) | Variable costs (scale per unit) |
|---|---|
| Rent, insurance, salaries, software subscriptions, loan payments, base utilities, marketing retainers | Materials, packaging, payment processing (~2.9% + 30¢), shipping, per-unit labor, sales commissions, marketplace fees |
The classic mistake is treating semi-variable costs (a salaried employee who can only handle 500 orders/month) as purely fixed. For planning, assign costs to the bucket they behave like at your current scale, and re-run the analysis when scale changes the behavior.
A candle business: $6,000/month fixed (studio, insurance, salary draw), $40 price, $15 per-unit cost. Contribution margin = $25 (62.5%). Break-even = 6,000 / 25 = 240 units/month — $9,600 of revenue. To bank $4,000/month of profit: (6,000 + 4,000) / 25 = 400 units.
Selling 350 units against a 240-unit break-even is a 31% margin of safety — demand could drop by a third before losses start. Under 15% is thin ice: one bad season or one lost account away from red. Investors and lenders read this number instinctively; you should know yours.
Define a unit as a billable hour or a standard engagement. Price = your rate, variable cost = direct delivery costs per unit (subcontractors, travel, tools billed per project). The math is identical.
Use a weighted-average contribution margin: if 60% of sales are product A ($25 margin) and 40% product B ($10 margin), the blended margin is $19. Run the calculator with your average selling price and blended margin, and re-check when the mix shifts.
Yes — pay yourself in the model. A 'profitable' business that only works if the owner works free isn't profitable; it bought a job. Put a realistic draw in fixed costs.
Generally yes for resilience, but not at the cost of capacity for growth. A second machine raises fixed costs and break-even while enabling triple the volume — judge the move by profit at expected sales, not break-even alone.
It's the floor-finder: any price that can't reach break-even at plausible volume is not a price, it's a countdown. Test candidate prices here before you print them.
Yes — your costs and prices are computed locally in your browser, never uploaded or stored.
Whenever a cost or price changes, and at least quarterly — rent increases, supplier changes and fee hikes silently move your break-even while you're busy selling.
Break-even isn't a business school exercise — it's the number that tells you whether this month's effort builds equity or burns savings. Know it to the unit, watch your margin of safety, and let the price lever do the heavy lifting it's capable of. For pricing your own time, continue to the Freelance Rate Calculator.