Your Cost & Revenue Details
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Break-Even Results
Break-Even Units / Month
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Break-Even Revenue—
Contribution Margin per Unit—
Contribution Margin Ratio—
Units to Reach Target Profit—
Revenue to Reach Target Profit—
How Break-Even Analysis Works
Break-even analysis tells you exactly how many units you need to sell to cover all costs — fixed and variable — before generating any profit. It's a fundamental business planning tool used to evaluate pricing, cost structures, and the viability of new products or ventures.
Key Formulas
- Contribution Margin = Selling Price − Variable Cost per Unit
- Break-Even Units = Fixed Costs ÷ Contribution Margin
- Break-Even Revenue = Break-Even Units × Selling Price
- Units for Target Profit = (Fixed Costs + Target Profit) ÷ Contribution Margin
How to Use Break-Even Analysis
- Pricing decisions: Raising price increases contribution margin and lowers break-even point
- Cost reduction: Cutting variable costs directly lowers break-even
- New product launch: Is the break-even achievable given realistic demand?
- Profitability planning: How many sales generate your target profit?
Frequently Asked Questions
What is the difference between fixed and variable costs? ▼
Fixed costs don't change with sales volume — rent, salaries, software subscriptions, insurance. Variable costs scale directly with production or sales — materials, shipping, sales commissions, transaction fees. Some costs are semi-variable (utilities with a base fee + usage). The more you can convert fixed costs to variable, the lower your break-even risk — but you sacrifice margin at scale.
What is a good contribution margin? ▼
It depends entirely on your industry. Software businesses often have 70–90% contribution margins (near-zero variable cost). Manufacturing might be 30–50%. Retail is often 20–40%. Service businesses vary widely. There's no universal "good" margin — what matters is whether it's high enough to cover your fixed costs and generate profit at a realistic sales volume.