What happens if my variable cost exceeds my selling price?

If variable cost per unit is higher than the price per unit, your contribution margin is negative. This means you lose money on every sale, and no volume will ever reach break-even. You must either raise prices, cut production costs, or discontinue the product.

How does break-even analysis help with pricing decisions?

Break-even reveals the minimum price needed to cover costs at a given volume. If your market research shows demand of 5,000 units, and fixed costs are $50,000 with variable costs of $12, the minimum price to break even is $22 per unit. Anything above that generates profit.

What is contribution margin and why does it matter?

Contribution margin is price minus variable cost per unit — the amount each sale contributes toward covering fixed costs. Once fixed costs are covered, the contribution margin becomes pure profit. A higher margin means you reach break-even faster and profit more per additional unit.

Should I include sunk costs in break-even calculations?

No. Sunk costs — money already spent and unrecoverable, like R&D or market research — should not be included in fixed costs. Break-even analysis is a forward-looking decision tool; only future costs that will be incurred should factor in.

Are the calculations on Break-Even Calculator | Find Your Profit Threshold private?

Yes, completely. All calculations are performed entirely locally inside your browser using JavaScript. No inputs or personal metrics are ever transmitted to or stored on our servers.

Break-Even Calculator | Find Your Profit

Break-Even Calculator – Cost AnalysisMetriova provides free online calculators for finance, business, health, and construction. Calculate loans, investments, fitness metrics, and project materials in seconds.Break-Even Analysis: Fixed, Variable, and Contribution MarginThe break-even point is where total revenue equals total costs — no profit, no loss. Formula: Break-Even Units = Fixed Costs / (Price - Variable Cost per Unit). The denominator (Price - Variable Cost) is the contribution margin per unit. If fixed costs are $10,000, price is $50, and variable cost is $30, the break-even point is 500 units.

Metric

Formula

Example

Fixed Costs

Rent, salaries, insurance

$10,000

Price per Unit

Selling price

$50

Variable Cost per Unit

Materials, labor

$30

Contribution Margin

Price - Variable Cost

$20

Break-Even Units

Fixed Costs / CM

500 units

Break-Even Revenue

Break-Even Units × Price

$25,000