What is contribution margin?

Contribution margin per unit is selling price minus variable cost. It is the amount each additional unit contributes toward covering fixed costs before you earn profit.

What if my price is below variable cost?

Then each sale loses money on a marginal basis and there is no classical break-even point—you must raise price, cut variable cost, or restructure the offer.

Is this for one month or a year?

Use consistent periods. If fixed costs are monthly, interpret the break-even units as monthly volume. If annual, use annual fixed costs and annualized assumptions.

Break-Even Calculator

Know how many units you must sell—or how much revenue you need—to cover fixed and variable costs.

Unit economics

Fixed costs are paid regardless of volume. Variable cost is spent for each unit sold.

Fixed costs ($ / period)

Selling price per unit ($)

Variable cost per unit ($)

Break-even units

782.6

Break-even revenue: $35217.39 · Contribution/unit: $23.00

Formula

Units = Fixed costs ÷ (Price − Variable cost)

Contribution margin / unit: $23.00
CM ratio: 51.1%

Break-even thinking for owners

Break-even analysis answers a simple question: how much do we need to sell before fixed costs are covered? Rent, salaries, software subscriptions, and insurance often behave like fixed costs within a planning window. Variable costs—materials, payment processing, shipping—scale with output. When contribution margin is positive, each sale pays down fixed overhead until you cross the threshold.

Use break-even alongside margin tools: our profit margin calculator and cost per unit calculator help you stress-test pricing. For cash timing, see how to manage cash flow on the hub—profit on paper and cash in the bank are different stories.

Frequently Asked Questions

See revenue and costs together

Billed brings invoicing and expense tracking together so you can monitor whether real sales volume supports your overhead.

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