Break-even calculator

Break-even analysis tells you how many units you need to sell (or how much revenue you need to generate) to cover all your costs - both fixed and variable. Below the break-even point, you're losing money. Above it, every additional sale generates profit.

Break-Even Point (units) = Fixed Costs / (Price per Unit - Variable Cost per Unit). The denominator is called the contribution margin - how much each sale contributes toward covering fixed costs. For example, if fixed costs are $10,000/month, price is $50, and variable cost is $20, you need 334 sales to break even.

Fixed costs are expenses that do not change with sales volume: rent, salaries, insurance, software subscriptions, loan payments, and marketing retainers. These costs exist whether you sell 0 units or 10,000. They're what you need to cover before making any profit.

Variable costs change with each unit sold: raw materials, packaging, shipping, payment processing fees, sales commissions, and marketplace fees. As you sell more, variable costs increase proportionally.

Contribution margin is the amount each unit sale contributes toward covering fixed costs: Price per Unit - Variable Cost per Unit. A $50 product with $20 in variable costs has a $30 contribution margin. Every sale puts $30 toward your fixed costs and eventually profit.

Your break-even point helps you understand the minimum performance your marketing needs to deliver. If you need 334 sales to break even and your conversion rate is 3%, you need about 11,134 visitors. At a $2 CPC, that is roughly $22,268 in ad spend - which needs to be included in your fixed costs.

Three levers: reduce fixed costs, reduce variable costs, or increase your price per unit. All three lower the number of sales needed to reach profitability.