Should I use monthly or annual fixed costs?

Whichever period you are planning for — just keep it consistent. Monthly fixed costs give a monthly break-even target; annual fixed costs give an annual one.

How do I turn this into a sales target?

Anything you sell above the break-even quantity is profit. Add the profit you want (divided by the per-unit contribution) to the break-even units to get your goal.

What lowers my break-even point?

Cutting fixed costs, raising the price, or reducing the cost per item all shrink the number of units you must sell. The calculator lets you test each of these quickly.

Break-even Units Calculator

The break-even units calculator focuses on the headline number for planning a month or a launch: how many items you must sell to cover your fixed costs. Enter your monthly fixed costs, the price per item and the cost per item, and it returns the units to break even and the revenue that represents. Use it to set realistic sales targets. Figures are estimates for planning — confirm a real budget or forecast with your accountant.

Monthly fixed costs ($)

Price per item ($)

Cost per item ($)

Result

The formula

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

Each sale contributes (price − cost per item) toward your fixed costs. Dividing fixed costs by that contribution gives the number of items you must sell to reach zero profit. Sell more than that and each extra unit is profit; sell fewer and you make a loss.

Worked example

Monthly fixed costs are $3,000, each item sells for $40 and costs $16 to make.

Contribution per item = 40 − 16 = $24
Break-even units = 3,000 ÷ 24 = 125 items
Break-even revenue = 125 × 40 = $5,000

So you need to sell 125 items a month to cover your fixed costs.

Frequently asked questions

Should I use monthly or annual fixed costs?: Whichever period you are planning for — just keep it consistent. Monthly fixed costs give a monthly break-even target; annual fixed costs give an annual one.
How do I turn this into a sales target?: Anything you sell above the break-even quantity is profit. Add the profit you want (divided by the per-unit contribution) to the break-even units to get your goal.
What lowers my break-even point?: Cutting fixed costs, raising the price, or reducing the cost per item all shrink the number of units you must sell. The calculator lets you test each of these quickly.

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