Break-even calculator
Covers your entered fixed and variable costs
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How it works & common questions
What is break-even and why does it matter?
Your break-even number tells you exactly when your business stops losing money and starts making a profit. Every sale brings in revenue, but first it must cover that item's direct costs (materials and packaging). Whatever remains is your contribution margin, which goes toward paying your fixed monthly expenses like rent and utilities.
A worked example
Suppose you make ceramic mugs. Your studio rent and kiln lease total $3,000 every month (fixed costs). Each mug costs $15 in clay, glaze, packaging, and payment fees (variable cost). You sell each mug for $40.
- Each sale contributes $25 toward overhead ($40 price minus $15 variable cost).
- To pay off your $3,000 monthly bills, you need to sell 120 mugs ($3,000 / $25).
- At 120 mugs, your total revenue is $4,800. The 121st mug is your first dollar of profit.
Common mistakes
Leaving out recurring costs like software subscriptions, merchant fees, accounting fees, or equipment maintenance leads to an artificially low break-even number. Also, if your variable cost per unit exceeds your selling price, you lose money on every transaction and no amount of sales volume can ever break even.