Break-even & Pricing Calculator

What this tool does

CM8-17 answers the question every owner, founder and branch manager eventually asks: how much do we have to sell before we stop losing money — and what happens if we change the price? You enter your fixed costs for a month or a year, your variable costs per unit sold, your price and the volume you expect. The tool returns break-even volume, break-even revenue, contribution margin, margin of safety, profit at plan, the units needed for a target profit, the price required to hit a target, three side-by-side scenarios and a sensitivity grid.

It is deliberately industry-neutral. The “unit” can be an item, an hour, a seat, a subscription, a service call, a kilogram or a square metre — set it in the Basis card and every label follows. Currency is your choice from more than forty, formatted by your own browser. Nothing is uploaded and nothing is installed.

What break-even actually means

Break-even is the point where total revenue equals total cost. Below it you are funding the business out of savings, an overdraft or your own patience. Above it, every additional sale drops its contribution straight to profit.

The insight that surprises people is that break-even is not driven by your costs in total — it is driven by the split between costs that stay the same and costs that move with each sale. Two businesses with identical total costs at the same volume can have wildly different break-even points and wildly different risk profiles.

Fixed costs, variable costs, and the awkward cases

Fixed costs are what you pay in a period whether you sell nothing or sell everything: rent, insurance, core salaries, software subscriptions, loan repayments, the accountant. Variable costs are incurred only because a specific unit was sold: materials, packaging, the courier, the card processing fee, the salesperson's commission.

Most real businesses have three awkward categories, and how you treat them changes the answer:

• Part-time and casual staff. If you genuinely send people home when it is quiet, that wage is variable — put it in the per-unit list as direct labour. If they are rostered regardless, it is fixed, however hourly the pay looks on the payslip.
• Your own salary. The textbook answer is to exclude it and call the result profit. The useful answer for an owner-operator is to include a realistic market salary for the job you actually do as a fixed cost. Otherwise break-even flatters you: the business “breaks even” while paying you nothing, which is not a business, it is a job you funded.
• Step costs. A second van, a second oven, a second shift. These are fixed until a volume threshold, then jump. Break-even maths assumes a straight line, so model each step as its own scenario rather than trusting one calculation across the jump.

Contribution margin, with a worked example

Contribution is what one sale leaves behind after its own costs are paid — the money available to chip away at the fixed costs, and then to become profit.

Take a workshop with fixed costs of 10,000 a month. It sells one product at 50. Materials, packaging and delivery come to 30 per unit. Contribution is 50 − 30 = 20, a margin of 40 %. Break-even is 10,000 ÷ 20 = 500 units a month, or 25,000 of revenue. At 700 units the workshop earns 700 × 20 − 10,000 = 4,000 profit. To make 6,000 it must sell (10,000 + 6,000) ÷ 20 = 800 units.

Notice that break-even revenue can be found without ever knowing the volume: 10,000 ÷ 40 % = 25,000. That is the version to use when you sell a mixed basket of products and only know your average margin.

Why percentage-based costs change the maths

Card fees, marketplace commissions, sales commissions and royalties are not fixed amounts — they are a slice of whatever you charge. Simple calculators treat every variable cost as a fixed amount per unit, and then quietly give the wrong answer as soon as you change the price. This tool lets each variable cost be either an amount per unit or a percentage of price, and solves accordingly:

The practical consequence: percentage costs never scale away. If commissions and fees take 12 % of the price, raising the price by 10 % does not give you 10 % more contribution — it gives you 10 % more of the 88 % you keep. And if percentage-based costs ever reach 100 %, no price on earth breaks even; the tool says so rather than printing a nonsense number.

Margin of safety and operating leverage

Margin of safety is the gap between the volume you expect and the volume you need, expressed in units, in revenue and as a percentage. It is the honest measure of how much bad luck the plan absorbs. A 5 % margin of safety means one poor month puts you under water; 40 % means a rough quarter is survivable. Treat anything under 20 % as a plan that needs either lower fixed costs or a firmer sales commitment before you sign a lease.

Operating leverage — total contribution divided by profit — tells you how violently profit reacts to volume. A leverage of 5 means a 10 % fall in sales cuts profit by roughly 50 %. High fixed costs buy high leverage: wonderful on the way up, brutal on the way down.

Using the price solver responsibly

The solver reverses the arithmetic: give it a target break-even volume, a target profit or a target contribution margin and it returns the price that gets there. It is genuinely useful for setting a floor — “below this number the contract cannot work” — and for testing whether a target is arithmetically possible at all.

It is not a pricing strategy. The solver assumes volume is unaffected by the price it recommends, that customers accept it, that competitors do not respond, and that your costs stay put. Before quoting a solved price, ask what happens to volume at that price, check it against what customers currently pay, and rerun the scenario tab with a realistic volume drop attached.

Why cutting price rarely works as well as owners expect

A discount comes entirely out of contribution, not out of revenue. Cut the price 10 % on a 40 % margin and you have not lost a tenth of your income — you have lost a quarter of the money that pays the rent. The volume increase needed just to stand still is:

• Price cut — at 20 % margin — at 30 % margin — at 40 % margin — at 50 % margin
• 5 % — +33 % — +20 % — +14 % — +11 %
• 10 % — +100 % — +50 % — +33 % — +25 %
• 15 % — +300 % — +100 % — +60 % — +43 %
• 20 % — impossible — +200 % — +100 % — +67 %

The mirror image is the good news: a price rise you can defend is the fastest profit lever you own. Raising price 5 % on a 30 % margin lets you lose about 14 % of your volume and still be no worse off — and you serve fewer customers to get there. Run both directions in the Scenarios tab with an honest volume reaction attached before you decide.

Scenario planning and the sensitivity grid

The Scenarios tab holds three versions of the same plan. Each applies percentage adjustments to price, variable cost, fixed cost and volume, then reports break-even and profit side by side. The standard set — current plan, price up 10 % with a small volume loss, variable cost down 10 % — is the comparison most owners actually need. Rename them and set your own adjustments for a specific decision: a supplier price rise, a new hire, a rent review, a marketplace fee change.

The sensitivity grid then moves price and variable cost together in steps and shows what break-even does across the whole range. Cells worse than your plan are shaded and marked with an exclamation mark, so the warning survives greyscale printing. If a small step in either direction pushes break-even past your expected volume, the plan is fragile whatever the headline number says.

Time to break even on an investment

Break-even volume ignores the money you spent getting started. Enter the fit-out, equipment or launch spend as the one-off investment and the tool divides it by the monthly operating profit at plan volume to give a payback period and an indicative recovery date. It is a simple, undiscounted payback: it does not account for the cost of capital, tax or the timing of cash within the month. For a full appraisal with discounting, use a capital-investment tool.

Saving your work

• Autosave keeps the whole model in this browser's local storage as you type, and restores it next time you open the file.
• Save writes immediately and flashes “Saved ✓” with the time. Nothing leaves your computer.
• Export .json / Import .json moves the complete model — costs, plan, scenarios, settings and report header — to a file you can archive, email or open on another machine.
• CSV exports produce a spreadsheet-ready cost breakdown with results and scenarios, and a separate file for the sensitivity grid.
• Print Report rebuilds a formatted report — executive tiles, all three charts, the cost tables, the scenario comparison, the sensitivity grid and your closing notes — then opens the print dialogue. Saving as PDF works. The report is rebuilt from current data every time, including when you press Ctrl+P.
• Reset is a two-step button: press once to arm, again to confirm. It clears the model and every key this tool has written to your browser. Export first if you want a copy.

Limits and disclaimer

Break-even analysis is a straight-line model of a business that is not straight. It assumes price and costs per unit are constant across the whole volume range, that one average unit represents your sales mix, that production equals sales, and that fixed costs do not step. It works in profit, not cash: a profitable plan can still run out of money if customers pay late or stock is bought early.

Sales tax, VAT and GST are collected on behalf of a tax authority and are not revenue, so every calculation here uses the net price. The optional tax field only shows the tax-inclusive shelf price for reference. No jurisdiction, tax regime or accounting standard is assumed anywhere in this tool.