The shortcut that understates break-even
Dividing fixed costs by the selling price leaves variable cost out and puts break-even too low. The denominator is contribution per sale.
Break-even point formula and calculator
Enter fixed costs for one period, selling price, and variable cost to see the sales volume and revenue needed to break even.
Enter your figures
Example: replace with your figuresAdd overhead that does not rise with each sale, such as payroll, rent and software. Example input: EUR 1,000 per month.
Keep fixed costs and the target sales volume within the same period. Do not mix monthly overhead with annual sales.
Your break-even point
Your scenario
50 sales
Break-even sales
Break-even revenue
EUR 2,500.00
The calculation, with your figures
Contribution per sale
EUR 20.00
Contribution margin ratio
40%
Variable cost per sale
EUR 30.00
EUR 1,000.00 ÷ EUR 20.00 = 50 sales
EUR 1,000.00 ÷ 40% = EUR 2,500.00
Break-even revenue uses the unrounded volume. The sales figure is rounded up to the next whole sale.
How the calculation works
Assumptions
Selling price and variable cost stay constant within each scenario. Fixed costs cover the selected month, quarter or year. In e-commerce mode, percentage fees apply to the average order value.
Formula
Contribution per sale = selling price − variable cost. Break-even volume = fixed costs ÷ contribution per sale, rounded up. Break-even revenue = fixed costs ÷ contribution margin ratio.
The break-even formula, line by line
Three divisions, in this order. The calculator applies them above; here they are so you can redo the arithmetic by hand.
| What you want | Formula | On the worked example |
|---|---|---|
| Contribution per sale | selling price − variable cost | EUR 50 − EUR 30 = EUR 20 |
| Break-even in units | fixed costs ÷ contribution per sale, rounded up | EUR 1,000 ÷ EUR 20 = 50 sales |
| Break-even in revenue | fixed costs ÷ contribution margin ratio | EUR 1,000 ÷ 40% = EUR 2,500 |
| Days to break even | break-even revenue ÷ annual revenue × 365 | EUR 30,000 ÷ EUR 60,000 × 365 = 183 days |
The first three lines are one month; the fourth restates the same example over a year.
Worked example
With EUR 1,000 in fixed costs, a EUR 50 selling price and EUR 30 in variable cost, contribution is EUR 20. Break-even is 50 sales and EUR 2,500 in revenue.
Scope of the estimate
Use this result to test whether sales cover costs, not to forecast demand, cash flow, tax or step changes in fixed costs.
Break-even point, U.S. Small Business AdministrationContinue your pricing work
A conversation about myPricing after your calculation, only if useful.
Know what you have to sell this month to cover your costs
Rarely answered in a business plan. It gets asked when a supplier raises prices mid-quarter, or when free shipping is reviewed.
Contribution per sale, not gross margin
Goods, marketplace and payment fees, packing, the shipping you absorb, returns. The returns cost is divided across all shipped orders, not the returned ones.
One break-even per channel
The same SKU carries 15% commission on one marketplace and 8% on another. A blended break-even reads covered while one channel loses money.
Three moments that lead here
All three happen in a business already trading. The plan exists; the number does not.
You are weighing a promotion or free shipping
Cutting EUR 5 off the selling price takes break-even from 50 sales to 67 in the worked example. Put the hypothesis in the second scenario and read the gap.
You are opening one more marketplace
A 15% commission instead of 8% leaves your purchase cost untouched and your contribution lower, so break-even moves. E-commerce mode keeps fees on their own line.
You have to defend a budget
A hire or a warehouse lease raises fixed costs by a known amount. Break-even restates that increase as sales per month.
This answer is only as good as the costs you typed
The calculator takes one hand-entered average. What comes next needs costs from real goods receipts, and a floor.
myFulfillment
Purchase cost comes from goods receipts
The average of goods receipts recorded, weighted by quantity, discounts deducted, per warehouse.
ProcurementmyFulfillment
It updates from purchase orders
Additional charges are spread across the lines by quantity.
ProcurementmyPricing
The margin floor becomes a rule
No repricing goes below the floor that is set.
Margin protectionFAQ
Questions about the break-even point formula
Break-even point in units = fixed costs ÷ (selling price − variable cost per unit). Break-even point in revenue = fixed costs ÷ contribution margin ratio. The table above shows both, with worked figures beside them.
Add the fixed costs for one period. Subtract variable cost from selling price for contribution per sale. Divide fixed costs by that contribution for units, and by the contribution margin ratio for revenue.
The level of sales at which total revenue equals total cost, so the period returns neither profit nor loss. It is a threshold, not a target: above it, each sale contributes its full contribution margin.
Per unit, it is selling price minus variable cost. The ratio is that contribution divided by the selling price, as a percentage. Divide fixed costs by the ratio for break-even revenue, without going through units first.
The point is one number. The analysis is deciding which costs belong in it — for an e-commerce seller, whether returns are divided across all shipped orders, and whether break-even is computed per channel or on the blend.
Fixed costs stand whether or not you sell: payroll, rent, insurance, software, depreciation. Variable costs follow volume: goods, marketplace and payment fees, packaging, the shipping you absorb. Fees and returns are the two most often left out.