How to calculate your break even point

It answers how many units you must sell before you stop losing money. Each unit contributes the difference between its price and cost towards fixed costs. Once contributions equal fixed costs, you break even. Anything after that is profit.

1. Open Calculators and press Break even.
2. In Fixed costs, type everything you pay for the period whether you sell one or none: rent, salaries, subscriptions, insurance.
3. In Selling price per unit, type what one unit sells for.
4. In Variable cost per unit, type what one more unit actually costs you. Materials, packaging, commission on that sale.
5. Read Units to break even in the dark card, then Revenue at that point and Contribution per unit under it.
6. Read the sentence at the bottom. It says the same answer the way you would say it out loud.

1. Fill in the three fields above first, so you have a break even.
2. In Profit target, type what you want left over after the fixed costs are covered.
3. A new row appears saying how many units are needed for that profit.
4. Notice how it moves. A profit target behaves exactly like extra rent, because the tool simply adds it to the fixed costs and divides again.

1. Set the selling price at or below the variable cost, on purpose, to see what happens.
2. The card stops giving a unit count and says every sale loses you a certain amount, so no volume breaks even.
3. Take that seriously. It is not an input error, it is the finding: at that price, selling more makes the hole deeper.
4. Fix the price or fix the unit cost. There is no quantity that rescues a negative contribution.