Break-Even Calculator

Pricing decisions feel intuitive until you actually do the unit economics. A product priced at $50 with $20 in variable cost and $5,000/month in fixed overhead has a break-even point — and if you can't articulate that number, you can't tell whether $50 is too low, too high, or right.

Enter fixed costs, variable cost per unit, and price per unit, and the calculator returns break-even units, break-even revenue, and the contribution margin per unit. A sensitivity table shows how break-even shifts if you change price or variable cost, which is the actual question most founders are wrestling with: do I cut costs, raise prices, or accept the breakeven I have?

The model assumes constant variable cost per unit, which is a simplification. Real businesses see economies of scale at higher volumes — but for early-stage planning, the linear model is close enough to make pricing decisions with eyes open.

The formula is straightforward: break-even units = fixed costs / (price per unit − variable cost per unit). The denominator is the contribution margin per unit, which is the dollar amount each sale contributes toward covering fixed costs. Once contribution margin × units sold equals fixed costs, you've broken even; every additional unit is gross profit. The relationship is linear in this simplified model, which means small changes in price or variable cost create proportional changes in the break-even point — sometimes dramatically so, especially when variable cost is close to price.

Worked example: a SaaS business with $20K/month fixed costs (salaries, rent, hosting), pricing at $99/month, with $5/customer in variable cost (payment processing, customer support tooling). Contribution margin = $94. Break-even = 20000 / 94 ≈ 213 customers. Now sensitivity: drop price to $79, contribution margin = $74, break-even ≈ 270 customers. A $20 price cut requires you to acquire 27% more customers to be at the same place. Conversely, cutting fixed costs by $5K/month drops break-even to 160 customers — a smaller absolute change in costs that produces a larger improvement than the price increase would. This is the trade-off the calculator makes legible.

The critical limit: the linear model assumes constant variable cost per unit. Real businesses see cost curves. Manufacturing has economies of scale (per-unit cost drops at higher volumes due to bulk pricing and learning effects); services have step-function cost increases (you need to hire your fifth support rep at 200 customers, your sixth at 250, etc.). For early-stage planning at modest volumes, the linear approximation is fine. For scaling decisions where you're projecting from 200 to 2000 customers, the linear model significantly understates margin improvement at scale.

What the calculator deliberately does not include is the time dimension. Break-even units doesn't tell you when you'll reach them. A break-even of 213 customers is irrelevant if your acquisition rate is 5/month and you're burning runway every month until then. The right next analysis is a runway calculation: at current burn rate, how many months until you reach break-even at expected acquisition rate? If runway runs out before break-even, the unit economics aren't the problem — it's the funding plan or the growth rate.