What the Break-Even Calculator Does
The break-even calculator finds the sales volume at which a business covers all its costs — no profit, no loss. Below that volume the business is subsidizing every sale; above it, each additional unit contributes profit at a predictable rate. It is the first viability test for a new product, price point, or location, because it converts vague confidence into a concrete monthly target you can compare against realistic demand. Our editorial analysis treats break-even volume, not projected profit, as the honest starting point for any launch budget.
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Break-Even Volume = Fixed Costs / (Price − Variable Cost per Unit)
Break-Even Revenue = Break-Even Volume × Price
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What each input means
Worked example
Fixed costs are $8,400 per month. The product sells at $120 with a variable cost of $45 per unit.
1. Contribution margin: $120 − $45 = $75 per unit.
2. Break-even volume: $8,400 / $75 = 112 units per month.
3. Break-even revenue: 112 × $120 = $13,440 per month.
4. Verify: at 112 units, revenue is $13,440; total cost is $8,400 + (112 × $45) = $8,400 + $5,040 = $13,440. Costs and revenue match exactly.
Limitations — when not to rely on this
The model assumes one product, one price, and costs that behave neatly. Real businesses face mixed product lines, step costs (a second employee, a bigger premises) that jump at certain volumes, and variable costs that change with supplier pricing. It also ignores timing: breaking even on paper in month six does not help if cash runs out in month three. Use the result as a minimum viability threshold, then stress-test it with a lower price and higher costs.
> [!TIP]
> Re-run the calculation at your pessimistic sales price, not your list price. If the business only breaks even at full price with zero discounts, it does not break even in practice.