What counts as a fixed cost?

Anything you pay whether or not you sell one more unit: rent, software, insurance, your own salary if you take one. Variable costs are the ones that only exist because a sale happened, such as materials, shipping and payment processing fees.

Where do payment processing fees go?

In variable costs. They scale with sales, and at roughly 3% they matter more than most people allow for on a low margin product.

Why does it sometimes refuse to give a number?

Because there is no volume that breaks even when each sale loses money or exactly covers itself. The honest output there is the reason, not a number.

Break-Even Calculator

How many units cover the fixed costs, and what a volume actually earns.

Break even at

134 units

That is $6,667 of revenue a month. Below it you are losing money, above it every sale adds $30.00 of profit.

Contribution per unit

$30.00

60% of the price

For $2,000 profit

200 units

67 more than break even

At 200 units

$2,000

Profit

Where each dollar of the price goes

Unit cost$20.00
Contribution$30.00

The contribution is the only part that pays the fixed costs. At a 60% contribution margin, a 10% price cut needs roughly 20% more volume just to stand still, which is why discounting a low margin product is so much more dangerous than it looks.

Profit at different volumes

67 units-$1,990
100 units-$1,000
133 units-$10
167 units$1,010
200 units$2,000
267 units$4,010

Bar length is the size of the profit or the loss, and the figure beside it carries the sign. Break-even is the point where the bar disappears.

What this does

Fixed costs, a price and a unit cost give you the volume where the business stops losing money. This also gives the contribution margin, the volume needed for a profit target, and what any volume you enter actually earns.

Why this one

It refuses to answer when the answer is a lie. If each unit sells for less than it costs to make, there is no break-even volume: selling more makes the loss bigger. A calculator that returns a negative number there, or a very large one, sends someone away planning to sell their way out of it.

The formula

contribution per unit  =  price  -  variable cost per unit
break-even units  =  fixed costs / contribution per unit
units for a target  =  (fixed costs + target profit) / contribution per unit

Published so you can check it. A calculator about money that will not show its working is asking to be trusted on the one thing you cannot verify.

Questions

What counts as a fixed cost?: Anything you pay whether or not you sell one more unit: rent, software, insurance, your own salary if you take one. Variable costs are the ones that only exist because a sale happened, such as materials, shipping and payment processing fees.
Where do payment processing fees go?: In variable costs. They scale with sales, and at roughly 3% they matter more than most people allow for on a low margin product.
Why does it sometimes refuse to give a number?: Because there is no volume that breaks even when each sale loses money or exactly covers itself. The honest output there is the reason, not a number.

Your data

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Take it with you

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Download, 12 KB

Read about it

Margin and markup are not the same number
A 50% markup is a 33% margin. Aim for a 40% margin, apply 40% as a markup, and you get 28.6% and lose two fifths of the profit you planned for on every sale.

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This tool is for education and planning only and does not constitute financial, legal or tax advice. EmpireSheets is not a regulated adviser. Rates, rules and thresholds change, so check anything time sensitive against a current official source before acting on it.