Monthly Break-Even Calculator
Calculate how many units you need to sell or revenue you need to earn each month to break even.
Enter fixed costs, variable cost, and price per unit.
Monthly break-even analysis is the most fundamental tool in business planning. It tells you the exact minimum revenue your business must generate each month to cover all costs without losing money. Every dollar above that number is profit; every dollar below is a loss.
Core formulas:
Contribution Margin (CM) = Price per Unit − Variable Cost per Unit
Break-Even Units = Monthly Fixed Costs / Contribution Margin
Break-Even Revenue = Break-Even Units × Price per Unit
Alternative using CM ratio:
CM Ratio = Contribution Margin / Price per Unit
Break-Even Revenue = Monthly Fixed Costs / CM Ratio
Variable definitions:
- Fixed Costs — costs that stay the same regardless of sales volume (rent, salaries, insurance, loan payments)
- Variable Costs — costs that increase with each unit sold (materials, shipping, commissions, packaging)
- Contribution Margin — the amount each unit contributes toward covering fixed costs after variable costs are paid
- CM Ratio — contribution margin expressed as a percentage of price; tells you how much of every revenue dollar goes toward fixed costs
Worked example: A bakery sells cupcakes at $4.00 each. Variable cost per cupcake: $1.50 (ingredients, packaging). Monthly fixed costs: $3,000 (rent, utilities, base wage).
CM = $4.00 − $1.50 = $2.50 Break-even units = $3,000 / $2.50 = 1,200 cupcakes/month Break-even revenue = 1,200 × $4.00 = $4,800/month
Interpretation guide:
- If current monthly sales are below 1,200 units → operating at a loss
- At exactly 1,200 units → breaking even (zero profit)
- Every cupcake above 1,200 adds $2.50 to profit
Safety margin:
Safety Margin = Actual Revenue − Break-Even Revenue
Safety Margin % = (Safety Margin / Actual Revenue) × 100
A safety margin above 20% is generally considered healthy. Below 10% means a small revenue dip could push the business into the red.
Sensitivity tip: Cutting variable costs is often more powerful than raising prices. A $0.25 reduction in variable cost has the same effect as a $0.25 price increase — but customers rarely notice cost reductions.