What's the difference between fixed and variable costs?

Fixed costs stay the same no matter how much you sell — rent, insurance, salaries. Variable costs rise with each unit — materials, packaging, per-sale fees. The calculator needs both to work.

Why round the units up?

You cannot sell a fraction of a unit at break-even, so the true break-even is the next whole unit. Selling 333 units in the example would leave you just short of covering costs.

What if price is below variable cost?

Then every sale loses money and there is no break-even point — the contribution per unit is negative. You would need to raise the price or cut the variable cost first.

Break-even Calculator

The break-even calculator tells you how many units you must sell to cover all your costs and start making a profit. Enter your total fixed costs, the price you sell each unit for, and the variable cost of producing one unit. It returns the break-even quantity and the revenue at that point. It's the single most useful number when launching a product or testing a price. These are estimates for planning — talk any real go/no-go decision through with your accountant.

Fixed costs ($)

Selling price per unit ($)

Variable cost per unit ($)

Result

The formula

Break-even units = fixed costs ÷ (price − variable cost per unit)

The gap between price and variable cost is your contribution per unit — the amount each sale puts toward fixed costs. Divide total fixed costs by that contribution to get the number of units you must sell to break even. Break-even revenue is simply that quantity multiplied by the price.

Worked example

Fixed costs are $5,000, you sell each unit for $25, and each unit costs $10 to make.

Contribution per unit = 25 − 10 = $15
Break-even units = 5,000 ÷ 15 = 334 units (333.3 rounded up)
Break-even revenue ≈ 334 × 25 = $8,350

So you need to sell about 334 units before you start making a profit.

Frequently asked questions

What's the difference between fixed and variable costs?: Fixed costs stay the same no matter how much you sell — rent, insurance, salaries. Variable costs rise with each unit — materials, packaging, per-sale fees. The calculator needs both to work.
Why round the units up?: You cannot sell a fraction of a unit at break-even, so the true break-even is the next whole unit. Selling 333 units in the example would leave you just short of covering costs.
What if price is below variable cost?: Then every sale loses money and there is no break-even point — the contribution per unit is negative. You would need to raise the price or cut the variable cost first.

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