Break-even calculator

The contribution-margin method

Each unit you sell contributes (price − variable cost) toward your fixed costs. Break-even is the point where total contribution equals fixed costs: break-even units = fixed costs ÷ contribution per unit.

With £2,000 of monthly fixed costs, an £8 price and £3 variable cost, each unit contributes £5 — so you need 400 units a month to break even, or £3,200 of revenue. Every unit after the 400th puts £5 toward profit.

Using a profit target

Treat target profit like an extra fixed cost: units = (fixed costs + target profit) ÷ contribution per unit. It answers "what volume pays me a real wage?" — often a more honest question than "when do I break even?".

Assumptions

• One "unit" can be a garment, a sheet, or an average job — as long as price and variable cost describe the same unit.

  Basis: Standard contribution-margin method; mixing units is the most common error, so keep them consistent.

• Fixed and variable costs are cleanly separable.

  Basis: Simplification — semi-variable costs (e.g. power) are usually close enough to split by judgement at this level of planning.

Limitations

• A planning estimate, not a forecast — real demand, price breaks, and product mix will move the numbers.
• Break-even units are rounded up: you can't sell part of a unit.
• If you sell several very different products, run the calculation per product line rather than blending them.

Common questions