Understanding your result
Break-even units are rounded up so their contribution covers fixed costs. Target-profit units cover both fixed costs and the entered operating profit. The table shows the small surplus that may arise when a fractional threshold is rounded to a whole unit.
If you need to work backward from a target margin to a selling price, use the Selling Price Calculator before checking the required sales volume here.
The formula
Both unit thresholds round upward. Selling price must exceed variable cost; otherwise extra sales cannot cover positive fixed costs through contribution. Revenue at a threshold uses the rounded unit count, and operating profit deducts both fixed and variable costs for the period.
Covering 50,000 in fixed costs
Selling a product for 500 with variable cost of 300 produces 200 contribution per unit. Fixed costs of 50,000 require 250 units to break even. Earning a further 20,000 operating profit requires 350 units and 175,000 revenue.
How to use this calculator
- Choose one accounting period and total its fixed costs.
- Enter a consistent net selling price and variable cost per unit.
- Add the desired operating profit for that same period and check whether the required sales volume is feasible.
Separate fixed and variable costs
Rent and salaried overhead may remain fixed within a range of output, while materials, transaction charges, and packaging may change with each sale. Some expenses are mixed. Classify them consistently before using the result; counting a cost in both categories overstates the threshold.
A single-product model assumes the same price and variable cost for every unit. Discounts, capacity constraints, step changes in staffing, and a changing product mix can alter contribution. Use an appropriate weighted contribution for a stable sales mix, or analyze each scenario separately.
Assumptions & limitations
What this calculation assumes
- All produced units counted in the threshold are sold.
- Price and variable cost stay constant over the modeled range.
- Fixed costs and target profit refer to the same period.
What to keep in mind
- Cash timing, inventory funding, income tax, and financing costs are not automatically modeled.
- The result is an accounting threshold, not a sales forecast.
Common questions
What if variable cost exceeds the selling price?
There is no finite positive sales volume that covers fixed costs under this model. The calculator asks you to correct the price or cost assumption.
Is contribution margin the same as net margin?
No. Contribution excludes fixed costs. Net or operating profit also deducts the relevant fixed costs and may include other expenses.