Break-Even Calculator

What break-even actually tells you

Break-even is the volume at which the business stops losing money — not the volume at which it's doing well. It's a floor, not a target. Treating it as a goal is how businesses end up running at exactly zero.

The number that matters most is contribution

Contribution is price minus variable cost — what each sale actually leaves behind to pay fixed costs. It matters more than revenue, because a business with high revenue and thin contribution needs enormous volume to survive, and volume is the hardest thing to buy.

Two businesses with identical $6,000 monthly fixed costs:

• $250 price, $90 variable cost → $160 contribution → 38 units to break even
• $250 price, $200 variable cost → $50 contribution → 120 units to break even

Same price, same fixed costs, three times the work. Contribution is where the leverage is.

How to improve the number

In order of how much they usually move it:

1. Raise the price. Every dollar of price increase is a dollar of contribution — it flows straight through. This is almost always the fastest lever, and almost always the last one people try.
2. Cut variable cost. Renegotiate suppliers, reduce payment processing fees, improve delivery efficiency.
3. Cut fixed costs. Real, but bounded — there's a floor below which you can't operate.
4. Sell more. The obvious answer, and the most expensive one. It's worth doing after the first three, not instead of them.

What this calculator doesn't include

It covers costs — not your income, taxes, debt principal, or reinvestment. Once you know break-even, add your own compensation to fixed costs and run it again. That second number is the one worth planning around.

It also assumes a single price and a single variable cost. If you sell several things at different margins, run it per product line or use a weighted average.