How much you have to sell before you start making money. Change any number and everything below moves, including the chart.
Rent, salaries, insurance, software - everything you pay whether you sell nothing or sell out.
A unit can be a product, a job, a day, or a subscription month.
Materials, delivery, payment fees, commission - costs that only exist because you made the sale.
Leave at zero if you are modelling something new.
The same 5% move applied to each lever. This is why price is almost always the thing to work on first.
| Change | New break-even | Profit at current volume |
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You can be well past break-even and still unable to pay wages, because profit is recorded when you invoice and cash arrives when the customer feels like it. Invoice finance closes the gap between the two.
See what your ledger could releaseThe test is whether the cost changes when you sell one more unit. Rent does not, so it is fixed. Raw materials do, so they are variable. The awkward ones sit in between: a salesperson on basic plus commission is part fixed and part variable, and should be split across both lines rather than dumped in one.
Delivery, card processing fees and packaging are variable and get left out constantly. On low-margin products they are often the difference between a break-even you can hit and one you cannot.
Contribution per unit is price minus variable cost - what each sale contributes towards covering your fixed costs. Once you know it, break-even is just fixed costs divided by contribution. It also tells you what an extra sale is actually worth, which is the number to have in your head when a customer asks for a discount.
A 10% discount on a product with a 40% contribution margin does not cost you 10% of profit. It costs you a quarter of the contribution on every unit sold, and you need to sell a third more units to stand still.
The gap between what you sell now and what you need to sell to break even, expressed as a percentage. Under 20% means a bad quarter puts you into losses. Over 50% means you have room to invest or absorb a shock. It is the single most useful output here and the one most break-even calculators leave out.
