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Break-Even Calculator
The volume that covers your fixed costs, and what it takes to hit a profit target.
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Result
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Break-even is where contribution covers fixed cost. Every unit after that contributes straight to profit, which is why the point is worth knowing precisely.
Contribution, not margin
Contribution is selling price minus variable cost — what each sale leaves towards fixed costs. It is the number that decides break-even, and it is the one discounting destroys fastest. A 10% price cut on a 40% contribution margin needs a 33% volume increase just to stand still.
The two levers
Cutting a fixed cost lowers break-even permanently. Raising price or cutting variable cost raises contribution on every unit. Chasing volume alone moves you along the line without changing where the line sits.
Margin of safety
How far sales can fall before you start losing money. Under 20% and a slow quarter becomes a cash problem, which is usually the first warning a business gets.
Frequently asked questions
What is the break-even point?
The sales volume at which contribution exactly covers fixed costs — the point where you stop losing money. Every unit sold beyond it contributes directly to profit.
What is contribution margin?
Selling price minus variable cost, expressed per unit or as a percentage of price. It is what each sale leaves towards fixed costs, and it is the figure discounting destroys fastest.
How much does a discount really cost?
A 10% price cut on a 40% contribution margin needs a 33% volume increase just to stand still. That arithmetic is why across-the-board discounting so often reduces profit while raising revenue.
What is a healthy margin of safety?
How far sales can fall before you reach break-even. Below 20%, a single slow quarter becomes a cash problem, which is usually the first real warning a business receives.