Financial models
Break-Even Analysis
How many sales cover your costs, how much room you have, and what moves the point.
Enter a price, the variable cost of each unit (materials, shipping, card fees) and fixed costs (rent, salaries, software).
Break-Even: How much must I sell to cover my costs?
How many sales cover your costs, and how much room you have above that. You need your price, unit cost and fixed costs. Drop it in and the answer appears in your browser with no account, no setup and nothing uploaded. Download the result as a PDF report or an Excel workbook to send on.
Related models
About this model
Enter a price and the cost of each unit, or your revenue and the costs that rise with it, plus your fixed costs. The contribution margin is what each sale leaves after its variable costs; break-even is fixed costs divided by it. With your current sales you also get the margin of safety (how far sales can fall before a loss) and operating leverage (how much profit moves when sales do). The chart shows revenue and total costs crossing at break-even, and the table shows how a 10% change in price, unit cost or fixed costs moves it.
How to run it
- Pick per unit, or revenue and costs if you sell many things or services.
- Enter fixed costs for the same period (a month, a quarter or a year).
- Add a target profit or current sales for the margin of safety, then download the workbook.
Frequently asked questions
How do you calculate the break-even point?
Break-even units are fixed costs divided by the contribution margin per unit (price minus variable cost per unit). Break-even sales are fixed costs divided by the contribution margin ratio (contribution ÷ price). Selling $50 items that cost $30 each to make, with $10,000 of fixed costs a month, breaks even at 500 units, or $25,000 of sales.
What counts as a fixed cost and what is variable?
Variable costs rise with each sale: materials, packaging, shipping, card fees, sales commissions. Fixed costs stay the same whatever you sell in the period: rent, salaries, insurance, software, loan payments. Some costs are a mix; split them as best you can, or put them in fixed to be safe.
What is the margin of safety?
How far sales can drop before you make a loss, as a share of current sales. At 800 units with break-even at 500, sales can fall 37.5% before the business loses money.
What is operating leverage?
Contribution divided by operating profit. At 2.7×, a 10% rise in sales lifts profit about 27%, and a 10% fall cuts it as much. High fixed costs mean high leverage: more upside, and more risk.
