Break even calculator: units, revenue, target profit and margin of safety

A break even calculator tells you how many units you have to sell each month before you make any profit at all. Enter your fixed costs, your price and what one unit costs you, and the tool below returns the break-even point in units and in revenue, the units you need for a target profit, and your margin of safety. It also shows what happens to the break-even point if you move the price 5 or 10 percent either way.

How to use the break even calculator

Fill in four numbers; the rest is optional. Fixed costs are what you pay every month whether you sell one unit or a thousand: rent, software, salaries, insurance, loan repayments. Variable cost per unit is everything that goes out the door with each sale: the product, packaging, shipping you pay for, and any per-item commission. Selling price is what the customer pays before sales tax.

The payment fee fields are there because most online stores pay a card processing fee on every order, and most break even point calculators ignore it. Stripe's standard US rate at the time of writing is 2.9% + 30¢ per successful domestic card transaction. If you sell through a marketplace or a platform with a different rate, type that in instead. If you sell in person for cash, set both fee fields to zero.

Add a target profit to see the units you need for a month you would be happy with, and your expected sales to get a margin of safety: how far sales can fall before you lose money.

How it works: the break even point formula

The calculator uses the standard formula that the US Small Business Administration publishes for its own break-even tool, with one addition for payment fees. The steps are:

1. Payment fee per unit = price × fee percent + fixed fee per order.
2. Contribution margin per unit = price − variable cost per unit − payment fee per unit. This is the money each sale contributes towards fixed costs, and then towards profit.
3. Contribution margin ratio = contribution margin per unit ÷ price.
4. Break-even units = fixed costs ÷ contribution margin per unit, rounded up, because you cannot sell a fraction of a unit.
5. Break-even revenue = fixed costs ÷ contribution margin ratio.
6. Units for a target profit = (fixed costs + target profit) ÷ contribution margin per unit, rounded up.
7. Margin of safety = (expected units − break-even units) ÷ expected units. A negative number means you expect to sell fewer units than you need.

The sensitivity table reruns steps 1 to 5 at five price points. The chart draws revenue and total cost as two straight lines; the break-even point is where they cross.

If the price is lower than the variable cost plus the payment fee, the contribution margin is zero or negative and there is no break-even point. The tool says so instead of showing a number, because selling more units in that situation only loses more money.

A worked example with the arithmetic shown

This is an example, not a benchmark. A small store sells one product at $45. Each unit costs $18 all in. Fixed costs are $3,000 a month. Card processing is 2.9% + 30¢. The owner wants $2,000 profit a month and expects to sell 250 units.

Step	Calculation	Result
Payment fee per unit	$45 × 0.029 + $0.30	$1.605
Contribution margin per unit	$45 − $18 − $1.605	$25.395
Contribution margin ratio	$25.395 ÷ $45	56.4%
Break-even units	$3,000 ÷ $25.395 = 118.1	119 units
Break-even revenue	$3,000 ÷ 0.5643	$5,316
Units for $2,000 profit	($3,000 + $2,000) ÷ $25.395 = 196.9	197 units
Margin of safety	(250 − 118.1) ÷ 250	52.7%
Profit at 250 units	250 × $25.395 − $3,000	$3,348.75

Two things stand out. Ignoring the card fee would have put the break-even point at 112 units, seven too low. And the price sensitivity table shows that a 10 percent price rise to $49.50 cuts the break-even point to 101 units. Whether the store would lose more than 15 percent of its buyers at that price is the real question, and our price increase calculator works out exactly how much volume you can afford to lose.

What a good break-even point looks like, and what to do next

There is no universal good number. A break-even point is only useful next to your realistic sales forecast, which is why the margin of safety matters more than the raw unit count. A margin of safety above about a third means a bad month will not put you underwater. A margin below 10 percent means you are one slow month from a loss, and a negative margin means the plan does not work yet.

If the number is too high, you have three levers, and they are not equal:

• Raise the price. Every dollar of price goes straight into the contribution margin (less the percentage card fee). It is the strongest lever and the one owners avoid most. Check it with the markup calculator to see where your margin lands against your category.
• Cut the variable cost. Negotiate the product cost, change the box, switch carriers, or move to a cheaper payment processor. Our Stripe fee calculator shows what the processing fee costs you per order and per month.
• Cut fixed costs. Often the smallest lever: dropping a $50 app subscription saves two units of break-even in the example above, while a $2 price rise saves nine.

Once you know your break-even point, run the same logic on your advertising. The break-even ROAS calculator tells you the return on ad spend you need just to cover an ad's cost, and the Shopify profit margin calculator shows what you keep per order after platform and payment fees.

Recalculate whenever something structural changes: a new price, a new supplier quote, new shipping rates, a hire, or a new subscription. Quarterly is enough for most small stores; monthly is better in your first year.

Break even calculator FAQ

What is a break-even point?

The break-even point is the sales volume at which total revenue equals total cost, so profit is exactly zero. Below it you lose money on the month; above it every extra unit adds its contribution margin to profit. It can be expressed in units sold or in revenue, and this calculator gives you both.

How do you calculate break-even point in units?

Divide your fixed costs by the contribution margin per unit, which is the selling price minus the variable cost per unit. If fixed costs are $3,000 and each unit contributes $25.40 after costs and card fees, you need $3,000 ÷ $25.40 = 118.1 units, so 119 whole units. Round up, since a fraction of a unit cannot be sold.

What is contribution margin and why does it matter?

Contribution margin is what is left from each sale after the variable costs of that sale are paid. It is the money that covers your fixed costs and, once those are covered, becomes profit. A product with a low contribution margin needs far more sales to break even, which is why a small price change moves the break-even point so much.

What is the difference between fixed and variable costs?

Fixed costs stay the same each month regardless of how much you sell: rent, salaries, software, insurance, loan repayments. Variable costs rise and fall with each unit: product cost, packaging, shipping, card fees, per-sale commissions. Costs with both parts, such as a phone plan with a base fee plus usage, should be split between the two.

Can I use this break-even calculator for more than one product?

Yes, with one adjustment. Work out a weighted average price and a weighted average variable cost across your products based on how much of each you sell, then enter those averages. The result is the break-even point for the whole store in average units. If one product dominates your sales, running it alone gives a close enough answer.

Does the break-even point include my own salary?

Only if you put it in fixed costs, and you should. A break-even point that leaves you unpaid is not a real break-even point. Add the monthly amount you need to draw from the business to fixed costs, or enter it as the target profit, and the calculator will show the units you need to cover it.