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    COSTS & CAPACITY

    What does it take
    to break even?

    Translate price, variable cost and fixed costs into a sales threshold. Then check whether your stated capacity can support it.

    Single product or serviceOperating break-even

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    Your operating assumptions

    Start with the example, then change the inputs.

    Your operating assumptions
    All amounts use this currency. No conversion.
    Fixed costs and capacity use the same period.
    Price charged for one item, visit or hour, in the selected currency.
    Cost of making or delivering one sale, such as materials or transaction fees.
    Operating costs for the selected month, quarter or year that do not vary with sales volume.
    Leave blank if unknown; zero means no capacity.
    For example: visit, item or billable hour.
    Use whole units for items or visits; continuous units for divisible work such as billable hours.

    Calculated in this browser. Your inputs stay in memory and are cleared on reload.

    THE METHOD

    Every sale contributes to fixed costs.

    For one product with constant price and unit cost, contribution is the price less the variable cost. Divide fixed costs by that contribution to find the continuous sales threshold.

    Contribution = price − variable cost
    Break-even units = fixed costs ÷ contribution
    Break-even revenue = exact units × price

    Illustrative worked example

    Monthly fixed costs of $600, a $10 selling price and $4 variable cost give a $6 contribution. The threshold is 100 sales and $1,000 revenue. Capacity of 90 sales gives a $60 operating loss, so it falls short.

    Change price, unit cost or fixed costs to see which change brings the threshold within your capacity. The example amounts are illustrative.

    Read the result carefully.

    • Operating break-even is different from investment payback, the first profitable month and cash runway.
    • For whole units, the minimum sales count rounds the threshold up. Compare that count with capacity for the same period; reaching capacity is not a sales forecast.
    • Nonpositive contribution has no positive-contribution sales target. If fixed costs and contribution are both zero, profit is zero at every volume. With no fixed costs and negative contribution, only zero sales has zero profit.
    • Mixed products, changing prices/costs, taxes and startup funding need additional models.

    Method source: U.S. Small Business Administration: break-even analysis.