Break-even sales and target-profit units
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. When expected sales are included, positive profit means a surplus and negative profit means a loss. The unit gap compares expected sales with the rounded break-even threshold. The percentage gap divides that difference by expected sales; it is undefined at zero sales.
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.
- Select Include expected sales to enter your estimated whole-unit sales for the same period. Compare the projected profit or loss with the thresholds; results update as inputs change.
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.
Compare expected sales with the threshold
With fixed costs of 2,700, a selling price of 45 and variable cost of 30, contribution is 15 and break-even is 180 units. Expected sales of 200 units give 9,000 revenue, 8,700 costs and 300 operating profit. Selling 100 units instead produces a 1,200 loss.
The displayed margin above or below break-even is (expected units − rounded break-even units) ÷ expected units × 100. At 200 expected units and a 180-unit threshold, the margin is 10%. This conservative whole-unit measure can differ from a margin calculated using the unrounded mathematical threshold. A negative margin shows how far expected volume falls short; zero expected sales leaves the percentage undefined.
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, target profit and expected sales 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.
How do I estimate profit at my expected sales?
Select Include expected sales and enter a whole-unit estimate. The calculator subtracts fixed costs and the variable cost of those units from their sales revenue. A negative result is an operating loss.
Sources & further reading
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