Enter your fixed costs, price per unit and variable cost per unit to calculate the exact number of sales needed to cover your costs and start making profit.
The break-even point is the sales volume where your total revenue equals your total costs — the point where you stop losing money and start making profit. Every sale below break-even contributes towards covering your fixed costs. Every sale above break-even is pure profit (minus variable costs).
Fixed costs don't change regardless of sales volume — rent, subscriptions, software, annual licences. Variable costs change with each unit sold — materials, packaging, payment processing fees, postage.
Knowing your break-even point tells you how many sales you need each month before you see any profit. It's one of the most important numbers in any small business.
Break-even units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit)
The denominator (Selling Price − Variable Cost) is called the contribution margin. It's what each unit contributes towards covering fixed costs and eventually generating profit.
Fixed costs are expenses that don't change month to month regardless of how many units you sell: rent, salaried wages, annual software subscriptions, insurance, website hosting. If you'd pay it even with zero sales, it's a fixed cost.
Variable costs scale directly with sales volume: raw materials, packaging, shipping, payment processing fees (per transaction), commission paid to affiliates. If the cost only occurs when you make a sale, it's variable.
Once you know your break-even units, set your sales target above it. If break-even is 50 units and you want £500 profit per month, divide £500 by your contribution margin per unit to find how many extra units you need on top of break-even.
Yes — either reduce fixed costs, increase selling price, or reduce variable costs. Reducing fixed costs has the most direct impact because it lowers the hurdle you need to clear before turning a profit. Even cutting one unnecessary subscription can meaningfully move your break-even.