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Break-Even Point Calculator
Every business starts in the red. Find out exactly how many units you need to sell to get into the black.
Why the Break-Even Point Matters
The break-even point is the most critical number for any new product or business. It tells you the minimum performance required to survive. If you can't realistically sell that many units, the business model is flawed.
Expert Tip from David Chen, CFA
"When calculating fixed costs, always include your own salary if you're working full-time on the business. Many entrepreneurs leave this out and think they are 'breaking even' when they are actually working for free. That's not a business; that's a volunteer job."
The Formula
Break-Even Units = Fixed Costs / (Price - Variable Cost)
The term (Price - Variable Cost) is called the Contribution Margin. It
represents how much money is left from each sale to pay down your fixed costs.
Common Mistake: Underestimating Variable Costs
Variable costs aren't just the raw materials. They include credit card processing fees (usually 2.9%), packaging, shipping labels, and even the electricity used to run the machine for that one unit. Missing these can make your break-even point artificially low.