Break-Even Analysis Basics
Fixed costs, variable costs, contribution margin — in the order you actually need them.
Break-even units = fixed costs ÷ contribution margin per unit. Everything else is detail.
Break-even tells you the minimum number of units you need to sell to cover your costs. Past that point, every unit is profit. The calculation is one formula and three numbers.
Part of: Saving & Spending Calculators
Quick answer
Break-even units = fixed costs ÷ contribution margin per unit. Everything else is detail.
Key points
- ▸ Fixed costs: expenses that do not scale with units sold (rent, salaries, equipment).
- ▸ Variable cost per unit: what each unit costs to produce (materials, shipping, processing).
- ▸ Contribution margin per unit = price − variable cost. This is what each sale contributes to covering fixed costs.
- ▸ Break-even units = fixed costs ÷ contribution margin per unit.
- ▸ Break-even revenue = break-even units × price.
Examples
- Small productFixed £5,000/month, variable £3/unit, price £13. Contribution = £10. Break-even = 500 units/month.
- Higher marginSame fixed £5,000, variable £5, price £25. Contribution = £20. Break-even = 250 units — half the volume.
- Price sensitivityA £2 price cut (13 → 11) on the small product changes contribution from £10 to £8. Break-even rises from 500 to 625 units.
When to use which tool
- Break-Even CalculatorMain tool — enter fixed, variable, price; get units and revenue.Calculate how many units you must sell to cover fixed costs — break-even quantity and revenue.
- Markup & Margin CalculatorFor pairing break-even with margin targets when setting a price.Convert between cost, price, markup, and margin. Shows profit, markup %, and margin % from any two inputs.
- Percentage CalculatorFor sensitivity analysis — "what if costs rise 10%?"Calculate percentages: what is X% of Y, X is what % of Y, and % change.
Related
- Break-Even CalculatorCalculate how many units you must sell to cover fixed costs — break-even quantity and revenue.
- Markup & Margin CalculatorConvert between cost, price, markup, and margin. Shows profit, markup %, and margin % from any two inputs.
- Percentage CalculatorCalculate percentages: what is X% of Y, X is what % of Y, and % change.
- Markup vs. MarginSame two numbers, different denominator, different answer.
Frequently asked questions
› What if I have multiple products?
Use a weighted average contribution margin across your product mix, or compute break-even per product line. Mixing the math only works if the mix stays stable.
› Should I include my own salary in fixed costs? Trust & accuracy
If you are running it as a business (not a hobby), yes — otherwise break-even hides the cost of your time. For side projects this is optional.
› How should I use this guide with a Kefiw tool? How-to
Use the guide as the plan and the linked Kefiw tool as the check. Read the steps first, try the move manually, then use the tool to compare outputs, catch edge cases, and decide whether the result actually fits your task.
› What mistake do tool guides help avoid? Troubleshooting
Tool guides help avoid using a utility mechanically without understanding what you are trying to accomplish. Most word, writing, and text utilities are fast, but speed can hide context mistakes. Know whether you are solving a puzzle, cleaning copy, drafting a line, or checking a rule.
› Can a tool guide help me learn the skill? How-to
A tool guide can help you learn if you pause before accepting the output and ask why it worked. Compare your first guess with the tool result, look for the rule or pattern, and repeat that review. Passive copying solves one task; active review builds the skill.