Fixed costs, price, variable cost
Rent, insurance, a monthly shop bill. The numerator.
What the customer pays. Must be above variable cost.
Materials and labor that move with each unit.
Break-even units · not a P&L
- Fixed
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- Price
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- Variable
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- Contribution
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- Break-even
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Enter fixed costs, price, and variable cost per unit.
Break-even units = fixed costs / (price − variable cost). Contribution margin per unit is the denominator, not markup %.
This is shop math — how many units until fixed costs are covered. It is not a full P&L, not tax, and not cash-basis vs accrual. Contribution margin per unit is the denominator, not markup %. $2,000 / $20 = 100 units. No break-even if price ≤ variable. Confirm the bid before you send it.
Contribution is the denominator, not markup %
Markup vs margin answers “what percent sits on cost or sell price.” Break-even answers the next cashflow question: how many units until fixed costs are covered. The unique angle is that contribution margin per unit is the denominator, not markup %. Price must be above variable cost; if not, there is no break-even — you lose more on every unit. That is the gotcha people miss when they only look at markup. This page is not a full P&L, not tax, and not cash-basis vs accrual. Markup lives on markup vs margin. GROSS pay lives on hourly salary and paycheck. Job-site materials live on the Acorn hub. Hitting 100 units covers fixed on paper; cash can still land weeks later under Net 30 (invoice date is day 0, then add 30 calendar days).
break-even units = fixed costs / (price − variable cost) contribution margin per unit = price − variable cost (that is the denominator, not markup %) $2,000 fixed, $50 price, $30 variable contribution = $50 − $30 = $20 units = $2,000 / $20 = 100 at 99 you are still short; at 100 you cover fixed $1,000 fixed, $10 price, $3 variable contribution = $7 units = ceil(1000 / 7) = 143 (ignore pennies; ceil if not exact) $50 price, $50 variable → $0 contribution → no break-even $50 price, $60 variable → −$10 contribution → no break-even (you lose more on every unit)
| Price | Variable | Contribution | Units |
|---|---|---|---|
| $50 | $30 | $20 | 100 |
| $50 | $50 | $0 | no break-even |
| $50 | $60 | −$10 | no break-even |
| $10* | $3* | $7 | 143 (on $1,000) |
*Last row is the ceil fixture: $1,000 fixed, not $2,000. Example: $20 contribution → 100 units. At 99 you are still short; at 100 you cover fixed.
FAQ
How many units until I cover fixed costs?
Break-even units = fixed costs / (price − variable cost). Contribution margin per unit is the denominator, not markup %. Fixture: $2,000/month fixed, $50 price, $30 variable → $20 contribution → 100 units. At 99 you are still short; at 100 you cover fixed. Ignore pennies; ceil if not exact.
What is contribution margin per unit?
Contribution margin per unit is price minus variable cost. $50 − $30 = $20. That $20 is what pays down fixed costs. Markup % is a different question (see markup vs margin). Break-even uses contribution as the denominator, not markup.
What if price is at or below variable cost?
No break-even. Zero contribution ($50 price, $50 variable) or negative ($50 price, $60 variable) means you lose more on every unit. Selling more never covers fixed. That is the gotcha people miss when they only look at markup. Price must be above variable cost.
Why do you round up (ceil) the unit count?
You cannot sell a fraction of a unit and still cover. Ignore pennies; ceil if not exact. $1,000 fixed, $10 price, $3 variable → $7 contribution → ceil(1000/7) = 143 units. The $2,000 / $20 fixture is exact: 100 units.
Is this a P&L, a tax calculator, or cash-basis vs accrual?
No. Not a full P&L, not tax, not cash-basis vs accrual. Shop math only: how many units until fixed costs are covered. Related tools are markup vs margin, business days / Net 30, hourly salary, paycheck estimate, and the Acorn hub. This page does not write a financial statement.
How is this different from markup vs margin?
Markup asks sell vs cost percent. Break-even asks how many units until fixed is covered. Contribution margin per unit is the denominator, not markup %. A healthy-looking markup with price still at or below variable cost has no break-even — you lose more on every unit. That is the gotcha people miss when they only look at markup.
Does hitting break-even mean the cash is in the bank?
No. Break-even units = fixed / (price − variable) is shop math on paper: $2,000 / $20 = 100 units covers fixed. Net 30 is when the invoice is due — usually 30 calendar days after the invoice date (day 0). You can sell the 100th unit and still wait weeks for cash. Use this page for the unit count; use business days / Net 30 for the due date. Neither is a P&L or a bank balance.
Is break-even in units the same as break-even in sales dollars?
No. This page returns units. Sales dollars at break-even = units × price (same as fixed ÷ contribution-margin ratio). Fixture: fixed $2,000, price $50, variable $30 → contribution $20 → 100 units. Revenue at that point = 100 × $50 = $5,000 (covers $2,000 fixed + $3,000 variable). Formula check: break-even revenue = fixed / (1 − variable/price) = 2000 / (1 − 30/50) = 2000 / 0.4 = $5,000. Do not treat the unit count as a dollar total. Related: markup vs margin and business days / Net 30 (cash timing after the paper break-even).