Break-Even Calculator

The break-even point is where your total revenue exactly equals your total costs — meaning your business is neither making a profit nor incurring a loss. Understanding this number helps you set realistic sales targets, evaluate pricing strategies, and make informed decisions about expanding your product line.

The Break-Even Formula

The break-even formula in units is Break-Even = Fixed Costs / (Price per Unit - Variable Cost per Unit). The denominator — price minus variable cost — is called the contribution margin. Each unit sold contributes this amount toward covering your fixed costs. Once you have sold enough units to cover all fixed costs, every additional sale becomes profit.

Fixed Costs vs Variable Costs

Fixed costs remain the same regardless of how many units you sell — rent, salaries, insurance, and equipment leases are common examples. Variable costs change in direct proportion to production volume: raw materials, packaging, shipping, and payment processing fees are typical variable costs. Correctly categorizing your costs is essential for an accurate break-even analysis.

• Fixed Costs — Rent, salaries, insurance, software subscriptions, and loan payments that stay constant month to month.
• Variable Costs — Raw materials, packaging, shipping, commissions, and transaction fees that scale with each unit sold.

How Nventory Helps

Nventory tracks your cost of goods sold, overhead allocation, and per-unit costs in real time across all your sales channels. With accurate, up-to-date cost data flowing automatically from your inventory system, you can run break-even analyses that reflect your actual business — not estimates. Nventory's reporting tools help you identify which products are most profitable and where pricing adjustments could improve your margins.