How to calculate break-even sales: whole units

Choose a period, such as one month. Use one selling price and one variable cost per unit for the whole period. Then enter the fixed costs and the units sold for that same period.

• Variable cost per unit: what you pay again for each extra sale. Product materials, packaging or a charge on each order can go here.
• Fixed costs: costs that stay the same within the sales you expect. Leave out any cost you already count per unit.
• Mixed costs: some bills have a fixed base and a part that grows with sales. Put the base in fixed costs and the rest in the cost per unit.

Sort a cost by how it changes with sales. Advertising can be a set budget for the month or an amount for each sale. Count it only once. Tax you collect from buyers for someone else is not automatically your sales revenue.

Example numbers: $30 selling price, $18 variable cost, $900 fixed costs and 100 units sold in the same month.

Each unit contributes $12.00, or 40% of its price. The first sales cover the $900 of fixed costs. The rest of the contribution makes the $300.00 result above. That result counts only the costs you enter, not every cost of a real business.

When each unit contributes more than $0, divide your fixed costs by the contribution per unit. For the example, $900 ÷ $12 = 75 units. At 75 units, your contribution equals your fixed costs.

You cannot sell part of a unit, so round up. A second example product sells for $30, costs $20 per unit and has $1,305 of fixed costs. Each unit contributes $10. The exact answer is 130.5 units, so it needs 131 whole sales.

At 130 units, the result is -$5.00. At 131 units, revenue is $3,930.00 and the result is $5.00. The break-even point in units is 131. In dollars, it is 131 units times the price, or $3,930.00. This can be a little more than the answer from a formula that allows part units.

A negative contribution margin means each sale loses money. Selling more only adds to the loss. A contribution of $0 does not help either: no number of sales covers your fixed costs. To fix it, raise the price or cut the cost per unit.

Zero fixed costs are a special case:

• Contribution of $0: each sale adds $0, so every number of sales gives a result of $0.
• Negative contribution: each sale loses money, so only zero sales breaks even.
• Positive contribution: each sale adds money, so break-even is zero units.

ROAS (return on ad spend) is your sales divided by your ad spend. The break-even ROAS calculator finds the ROAS your ads need to break even. This guide asks a different question: how many sales cover your fixed costs? Count each ad cost once. If ads are in your fixed costs here, do not subtract them again in the ROAS calculator.

Margin and markup divide by different numbers. The margin vs markup guide explains how.

Check these points before you use the answer.

• It works for one product.
• The price and the cost per unit stay the same.
• Your fixed costs still fit the units you sell.
• Discounts, returns, how much you can make and which products sell can all change the answer.
• The units sold are your guess. This guide does not predict demand or cash flow.

Add the fees and costs you know. No platform fee, tax or loan cost is added for you.

See the full list of limits on the calculator page.

1. How does a lower variable cost change break-even sales?Each unit then contributes more, so you need fewer sales. In the example, cut the variable cost from $18 to $15. Each unit now contributes $15, and break-even falls from 75 to 60 units.
2. What is the margin of safety?It is how far your sales are above break-even. OpenStax defines it as the difference between current sales and break-even sales. In the example, 100 planned units minus 75 is 25 units, or $750.00 of sales.

The definitions follow OpenStax's contribution margin chapter. The break-even formula follows OpenStax's break-even chapter. The SBA's break-even guide also shows how to sort costs. The margin of safety comes from OpenStax's margin of safety section. The date each source was read is in the list below. All examples on this page are made-up numbers. They use the same formula as the calculator.

Calculate contribution and break-even sales or browse business calculators.