1. Scope
The Break-Even Units Calculator finds three numbers: the unit volume required to cover total fixed costs, the revenue at that volume, and the unit volume required to earn a target profit. It uses the classic contribution-margin formulation from managerial accounting. It is a single-product model — multi-SKU break-even requires a weighted contribution margin the tool does not compute automatically.
2. Inputs and outputs
Inputs: price per unit, variable cost per unit, total fixed cost (per period), optional target profit. Outputs: contribution margin per unit (price − variable), break-even units, break-even revenue, target-profit units, and the period's implied profit at a user-entered volume.
Engine source: src/lib/break-even/engine.ts.
3. Formula / scoring logic
contribution_margin_per_unit = price - variable_cost
contribution_margin_ratio = contribution_margin_per_unit / price
break_even_units = fixed_cost / contribution_margin_per_unit
break_even_revenue = fixed_cost / contribution_margin_ratio
target_units = (fixed_cost + target_profit) / contribution_margin_per_unit
4. Assumptions
- Fixed-vs-variable cost split is the user's responsibility. Rent, salaries, and subscription tools are fixed. Materials, payment-processing fees, shipping, and packaging are typically variable. Semi-variable costs (utilities, some payroll) need to be split manually.
- Linear variable cost. Each additional unit adds the same variable cost. Economies of scale, step-change tooling costs, and bulk-discount thresholds are not modelled.
- Single product / single contribution margin. For a multi-SKU business, compute a sales-mix-weighted average contribution margin before entering it. The tool does not do this for you.
- Revenue is recognised at sale. Subscription break-even needs to be computed on contribution-margin-per-month rather than per-unit — still works, but treat "units" as "customer-months".
- Contribution margin must be positive. If variable cost exceeds price, every unit loses money and break-even is undefined. The tool surfaces this explicitly.
5. Data sources
The contribution-margin formulation is standard in managerial-accounting curricula. The canonical reference:
- Garrison, Noreen, Brewer — Managerial Accounting, McGraw-Hill (any recent edition). Cost-Volume-Profit chapter.
- US Small Business Administration — break-even analysis (plain-English reference).
6. Known limitations
- Point estimate, no uncertainty. A ±10% swing in variable cost moves break-even by roughly ±10% in the opposite direction. The tool does not surface sensitivity bands.
- No time dimension. Break-even in units is meaningful; break-even in months requires knowing your sales rate.
- Multi-product averaging is manual. A coffee shop selling espresso and pastries needs a blended contribution margin weighted by the sales mix.
- No tax or financing costs. Break-even in this formulation is operating break-even, not post-tax.
7. Reproducibility
Input
price = $50, variable_cost = $15, fixed_cost = $7,000 per month, target_profit = $3,000.
Expected output
contribution_margin = $35/unit (70% ratio). Break-even = 200 units ($10,000 revenue). Target-profit volume = 286 units ($14,300 revenue).
8. Change log
- 2026-04-24methodology page first published.
Worked example
Run live against the same engine this site ships
(/engines/break-even-units-calculator.js).
The inputs and outputs below are recomputed on every build and
independently re-verified in CI — they are never hand-authored.
Input
- tool
- break_even_units_revenue
- mode
- single
- fixed_costs
- 20000
- target_profit
- 10000
- planned_units
- 350
- unit_price
- 150
- variable_cost_per_unit
- 60
Output
- mode
- single
- fixedCosts
- 20000
- targetProfit
- 10000
- contributionMarginPerUnit
- 90
- contributionMarginRatio
- 60
- weightedAveragePrice
- 150
- breakEvenUnits
- 222.22
- breakEvenRevenue
- 33333
- targetProfitUnits
- 333.33
- targetProfitRevenue
- 49999.5
- marginOfSafetyUnits
- 127.78
- marginOfSafetyPercent
- 36.51
- scenarioTable[0].label
- base
- scenarioTable[0].unitPrice
- 150
- scenarioTable[0].variableCostPerUnit
- 60
- scenarioTable[0].contributionMarginPerUnit
- 90
- scenarioTable[0].breakEvenUnits
- 222.22
- scenarioTable[0].breakEvenRevenue
- 33333
- scenarioTable[1].label
- price_minus_10
- scenarioTable[1].unitPrice
- 135
- scenarioTable[1].variableCostPerUnit
- 60
- scenarioTable[1].contributionMarginPerUnit
- 75
- scenarioTable[1].breakEvenUnits
- 266.67
- scenarioTable[1].breakEvenRevenue
- 36000.45
- scenarioTable[2].label
- variable_plus_10
- scenarioTable[2].unitPrice
- 150
- scenarioTable[2].variableCostPerUnit
- 66
- scenarioTable[2].contributionMarginPerUnit
- 84
- scenarioTable[2].breakEvenUnits
- 238.1
- scenarioTable[2].breakEvenRevenue
- 35715
- scenarioTable[3].label
- price_minus_10_and_variable_plus_10
- scenarioTable[3].unitPrice
- 135
- scenarioTable[3].variableCostPerUnit
- 66
- scenarioTable[3].contributionMarginPerUnit
- 69
- scenarioTable[3].breakEvenUnits
- 289.86
- scenarioTable[3].breakEvenRevenue
- 39131.1
- assumptionsEcho.mode
- single
- assumptionsEcho.fixedCosts
- 20000
- assumptionsEcho.targetProfit
- 10000
- assumptionsEcho.plannedUnits
- 350
- assumptionsEcho.unitPrice
- 150
- assumptionsEcho.variableCostPerUnit
- 60
Frequently asked questions
- What does the Break-Even Units Calculator compute?
- It finds three numbers: the unit volume required to cover total fixed costs, the revenue at that volume, and the unit volume required to earn a target profit, using the classic contribution-margin formulation from managerial accounting.
- Does it handle multiple products?
- No. It is a single-product model — multi-SKU break-even requires a weighted contribution margin the tool does not compute automatically.
- Can I verify it with a worked example?
- Yes. With price = $50, variable_cost = $15, fixed_cost = $7,000/month, target_profit = $3,000: contribution_margin = $35/unit (70% ratio), break-even = 200 units ($10,000 revenue), target-profit volume = 286 units ($14,300 revenue).