When do you break even?
Enter three numbers and see how many units you need to sell each month to cover all your costs, plus your contribution margin and the cushion you have if sales dip.
Fill the fields to see your break-even point.
What each metric actually means.
Break-even analysis is the simplest unit-economics check there is. Four numbers tell you whether your pricing and cost structure can ever work, and how much room you have if sales soften.
Break-even units Core
= fixed costs ÷ contribution margin per unit
The number of units you need to sell each month to cover both fixed and variable costs. Below it, you lose money. At it, you make zero profit. Above it, every additional unit contributes its contribution margin to profit.
Break-even revenue Core
= break-even units × price
The same threshold, expressed in revenue dollars instead of unit count. Useful for businesses that sell multiple products at different prices, where unit count is less meaningful than total revenue.
Contribution margin Driver
= price − variable cost (per unit)
The piece of each sale that contributes toward covering fixed costs (and, beyond break-even, toward profit). A higher contribution margin lowers your break-even and gives you more room to absorb fixed-cost growth.
Contribution margin % Ratio
= contribution margin ÷ price
Same idea, as a percent. 60% means 60 cents of every dollar in sales is available to cover fixed costs. Under 20% is structurally thin. Under 0% means you lose money on every sale; no volume can fix that.
Margin of safety Cushion
= (current sales − BE units) ÷ current sales
How far above break-even your current sales sit, as a percent. A 30% margin of safety means sales can drop 30% before you hit break-even. Under 20% is fragile; one bad month tips you into losses.
Operating leverage Strategy
High fixed + high margin = high leverage
Businesses with high fixed costs and high contribution margins (SaaS, courses) have high operating leverage: above break-even, profits scale fast. The trade-off is a higher break-even, which is dangerous if growth stalls.
Benchmarks by business type
Sources: Harvard Business Review unit economics primer, Profit First by Mike Michalowicz, Investopedia break-even analysis.
Honest answers.
The break-even point is the number of units (or amount of revenue) you need to sell in a period to cover all your costs. Below break-even, you lose money each month. At break-even, you make zero profit. Above break-even, every additional unit contributes its contribution margin to profit. Knowing your break-even tells you the minimum sales target your business needs to survive.
Break-even units = monthly fixed costs divided by contribution margin per unit. Contribution margin per unit = price minus variable cost. For example, if your fixed costs are $5,000 per month, your variable cost per unit is $20, and your price is $50, the contribution margin is $30 per unit, and you need 167 units sold ($5,000 / $30) to break even each month.
Contribution margin is the amount of revenue from each sale that goes toward covering fixed costs (and, beyond break-even, toward profit). It equals price minus variable cost per unit. As a percent, it is contribution margin per unit divided by price. A 60% contribution margin means 60 cents of every dollar in sales is available to cover rent, salaries, and software; the other 40 cents pays the variable cost of delivering that sale.
It depends on the business model. Digital products and SaaS typically run 80-95% (almost nothing to deliver each extra sale). Online courses 80-95%. Service businesses 30-50% (mostly labor). Physical products 30-60% (materials, fulfillment). Retail 20-40%. Below 20% is structurally thin and hard to scale because fixed costs eat the margin fast. Below 0% means you lose money on every sale, which no volume can fix.
Margin of safety is the gap between your current sales and your break-even point, as a percent of current sales. Formula: (current units - break-even units) / current units. A 30% margin of safety means your sales can drop 30% before you hit break-even. Under 20% is fragile. Over 40% is healthy. Use it to stress-test before adding fixed costs (a new hire, an office, a software subscription) that would raise your break-even.
Every recurring cost that does not change with sales volume. Salaries (yours and your team's), rent, software subscriptions (CRM, accounting, design tools), insurance, accountant or bookkeeper fees, base utilities, domain and hosting, paid memberships. Marketing spend is usually treated as variable if it scales with sales targets, but if it is a fixed monthly budget, include it in fixed costs.
Costs that increase with each additional sale. Raw materials, product cost (cost of goods sold), shipping, fulfillment fees (Amazon FBA, 3PL), payment processing fees (~2.9% + $0.30 for Stripe / PayPal), per-transaction commissions to affiliates or salespeople, marketplace cuts (15% on Shopify apps, 30% on App Store, etc.).
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