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Find the sales volume where contribution finally covers your fixed costs.
Break-even converts a fixed-cost base into a sales target. Below it, every unit sold reduces a loss; above it, every unit is profit. Knowing where the line sits changes how you read a slow month — and tells you instantly whether a price cut can ever be volume-recovered.
Your numbers
Rent, salaries, software — costs that do not move with volume.
Break-even volume
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Units you must sell in the period before profit starts.
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The formula
Break-even units = Fixed costs ÷ (Price − Variable cost)
The gap between price and variable cost is contribution — what each unit puts towards fixed costs.
What it means
Cost of Goods Sold — full definition
Read in the glossarySplit costs honestly into fixed and variable. Anything that scales with each unit sold — materials, commission, transaction fees, delivery — is variable.
Use the same period for fixed costs and for the volume you plan to compare against: monthly against monthly, annual against annual.
Subtract variable cost from price to get contribution, then divide fixed costs by it.
Semi-fixed costs break the model. Warehouse space and supervision step up at thresholds rather than sliding smoothly, so a single break-even point can be optimistic just past a step.
Cutting price raises break-even volume more than it feels like it should. A 10% price cut on a 40% contribution margin needs a 33% volume increase just to stand still.
Worked example
Fixed costs of 240,000, price 30, variable cost 18: contribution is 12 a unit, a 40% ratio, and break-even is 20,000 units or 600,000 in revenue. Drop the price to 27 to win a deal and contribution falls to 9 — break-even jumps to 26,667 units. The same fixed base now needs a third more volume.
No. Break-even is the volume at which a period's revenue covers that period's costs. Payback is how long an upfront investment takes to return.
Use the weighted-average contribution margin across your actual sales mix, then divide fixed costs by it. Recheck whenever the mix shifts materially.
Variable — the cost of goods moves with each unit sold. Warehouse rent to store them is fixed.
This calculator works on one set of numbers. AWRA OpsHub keeps break-even point calculator results current across every item, supplier and location — automatically.
Turn cost and price into margin %, markup % and profit per unit.
Set a price from cost plus markup, and see the margin it really delivers.
Price what it costs you every year to keep stock sitting on the shelf.