Break-even point: how many sales a business needs

More sales do not always mean a profit. Break-even analysis compares the contribution from each sale with the costs to cover over the same period. It tests a price and volume, rather than predicting demand.

Separate fixed and variable costs

Rent, software and some salaries may be fixed within the range studied. Materials, packaging, commissions and delivery can depend on units sold. Use the same period for costs and sales. Convert percentage fees into a cost per unit at your chosen price; do not omit them because they are not a fixed amount.

Calculate contribution and round up

Unit contribution = price − variable cost per unit. Break-even units = fixed costs / unit contribution, rounded up for indivisible units. Estimated profit = units × contribution − fixed costs. Do not confuse a money contribution with a percentage of sales, or round down a required fraction of a sale.

Recognise unviable cases

If price does not exceed variable cost and fixed costs remain, selling more cannot reach break-even: each unit contributes zero or a loss. Review price, costs or the offer. This model assumes one product and constant costs; volume discounts, product mixes and capacity limits require further scenarios. Accounting break-even also does not guarantee timely payment or sufficient cash.

Hypothetical example, not a forecast

The amounts are invented examples. They are not current prices or personalised recommendations.

Example inputs

Approximate results

A common question

Does break-even include every tax?

Not automatically. Use consistent prices and costs, without mixing tax-inclusive and tax-exclusive amounts; include applicable costs for your circumstances.

Try these inputs and compare different assumptions in the calculator.

Why are units rounded up?

An indivisible unit cannot be partly sold; rounding down leaves uncovered costs.