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Work out how many units — and how much revenue — you need to cover your costs and start turning a profit.
Contribution per unit
£0.00
Break-even point
0
units
Break-even revenue
£0.00
Your sale price needs to be higher than the variable cost per unit to break even.
Fixed costs (rent, salaries, software) stay the same however much you sell. Variable costs (materials, postage, fees) rise with each sale. Each unit’s contribution — sale price minus variable cost — chips away at your fixed costs. Once they’re covered, every further sale is profit.
Three numbers decide when a product or business starts making money.
Fixed costs (rent, salaries, software) don’t change with sales. Variable costs (materials, postage, fees) are incurred per unit sold.
Sale price minus variable cost. It’s what each sale contributes towards covering your fixed costs.
Fixed costs ÷ contribution per unit = the number of units you must sell to cover all your costs.
It’s the level of sales where your total revenue exactly covers your total costs. Below it you make a loss; above it, you make a profit.
Divide your fixed costs by the contribution per unit (sale price minus variable cost per unit). For example, £5,000 ÷ (£50 − £20) = 167 units.
The contribution per unit is the sale price minus the variable cost — the amount each sale contributes towards your fixed costs and, once those are met, to profit.
Reduce fixed costs, cut the variable cost per unit, or raise your price. Automating admin and routine tasks is a common way to bring fixed costs down.
Neetrix turns your live sales and cost data into forecasts, dashboards and profitability reports — so you can see exactly where you stand and where you’re heading.