Complete guide: Break-even
Updated:
Unit contribution is price minus variable cost. Divide fixed costs by contribution for the theoretical threshold; round up because units are whole. Fixed costs 1,000, price 50 and variable cost 30 require 50 units.
For target profit divide fixed costs plus target by contribution. Forecast profit is units × contribution − fixed costs. If price does not exceed variable cost no sales threshold can cover fixed costs in this model and an alert is shown.
Use amounts from the same period and currency without exchange conversion. Separate customer-collected taxes from revenue when applicable and do not also include a fee under another expense. Initial business amounts are examples, not your company's data.
How it works
- 1Use costs and sales from the same period.
- 2Contribution = price − variable cost.
- 3Round upward to cover costs and target.
Frequently asked questions
Does it work for multiple products?
The model uses one product or a stable mix represented by average cost and price. A changing sales mix changes break-even.
Does the link preserve my inputs?
Yes. Amounts, currency and options are included in the shared link to reproduce the calculation. Recipients can see those inputs.