Contribution margin per unit
Contribution per unit = selling price − variable cost per unit
This is the amount each sale contributes toward fixed costs and, after those costs are covered, profit.
Inventory Break-Even Calculator – Units, Revenue and Contribution Margin
Costs and selling price
Break-even results
Break-even whole units
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First whole-unit threshold
Break-even revenue
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At the exact break-even point
Exact break-even units
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Before whole-unit rounding
Contribution per unit
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Price − variable cost
Contribution margin ratio
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Contribution ÷ price
Target-profit units
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Optional
Results will appear here after valid inputs are entered.
Expected-sales scenario
Revenue—
Operating profit / loss—
Margin of safety—
Margin of safety %—
Enter expected unit sales to compare the plan with break-even.
Revenue and total cost
Revenue
Total cost
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Break-even formulas and method
Contribution margin ratio
Contribution margin ratio = contribution per unit ÷ selling price
The ratio is the share of each revenue unit available to cover fixed costs and profit.
Break-even units
Break-even units = fixed costs ÷ contribution per unit
The calculator shows the exact result and rounds up to the first whole unit. Rounding normally creates a small positive profit.
Break-even revenue
Break-even revenue = fixed costs ÷ contribution margin ratio
This equals exact break-even units multiplied by selling price. Whole-unit revenue can be slightly higher.
Target-profit units
Target-profit units = (fixed costs + target profit) ÷ contribution per unit
The displayed result rounds up to the first whole unit that meets or exceeds the entered target.
Expected operating result
Operating result = expected units × contribution per unit − fixed costs
This is a simplified cost-volume-profit estimate, before items excluded from your inputs.
Calculation steps for your figures
- Enter valid figures to see the calculation steps.
Worked inventory break-even example
Inputs
Suppose monthly fixed costs are $50,000, the selling price is $25 per unit, and variable cost is $10 per unit.
Contribution margin
Contribution is $25 − $10 = $15 per unit. The contribution margin ratio is $15 ÷ $25 = 60%.
Break-even output
Exact break-even units are $50,000 ÷ $15 = 3,333.333. At least 3,334 whole units must be sold. Exact break-even revenue is $83,333.33.
At 5,000 units
Revenue is $125,000 and contribution is $75,000, leaving an estimated $25,000 operating profit after the entered fixed costs.
How to use this calculator accurately
- Choose a currency and cost period, then enter fixed costs for that same period.
- Enter the net selling price and every cost that changes with one unit sold.
- Optionally enter expected unit sales and a target profit, then review the results, calculation steps and cost-volume chart.
| Input | Include | Keep out or handle separately |
|---|---|---|
| Fixed costs | Costs that stay broadly unchanged within the chosen period and relevant volume range: rent, fixed salaries, insurance and subscriptions. | Costs already included per unit; unrelated business lines unless this product is intended to cover them. |
| Variable cost per unit | Product or material cost, unit packaging, fulfillment, transaction fees, sales commissions and other costs driven by each unit sold. | Fixed overhead. Split mixed or step costs into fixed and variable parts where practical. |
| Selling price | Expected net price actually retained per unit after normal discounts, returns and allowances. | Sales tax or VAT collected for a tax authority, unless it is genuinely part of revenue under the applicable treatment. |
Keep periods consistent. Monthly fixed costs produce a monthly break-even quantity; annual fixed costs produce an annual quantity. The price and variable cost must describe the same unit.
Assumptions, inventory limits and financial disclaimer
- The model covers one product or a constant sales mix, with a stable selling price and variable cost per unit.
- Fixed costs are assumed to remain fixed within the relevant sales range. Capacity limits, step costs, tiered fees, discounts and shortages can change the result.
- Units in this model are units sold. Inventory purchased or produced but not sold does not generate revenue.
- The calculation does not model cash timing, financing costs, income tax, inventory write-downs, spoilage, returns, working capital or accounting-method differences unless you include their relevant effects in the inputs.
Educational estimate, not financial or accounting advice. Break-even analysis is a planning model, not a forecast or guarantee. Reconcile decision-critical figures to current supplier terms, pricing, capacity, inventory records and the accounting rules that apply to your business. Consult a qualified professional when appropriate.
Method reference: the U.S. Small Business Administration break-even guide gives the single-product unit and sales formulas used here. See also AccountingCoach’s contribution-margin explanation.
Inventory break-even FAQ
How do you calculate break-even units?
Subtract variable cost per unit from price, then divide fixed costs by that unit contribution. Round up for whole inventory items.
What is contribution margin?
It is selling price minus variable cost. Each unit’s contribution first covers fixed costs; amounts above total fixed costs become operating profit in this model.
Why show exact and whole units?
The formula may return a fraction, while physical inventory is normally sold as whole items. The rounded-up result is the practical threshold.
Does purchasing inventory count as breaking even?
No. This model uses units sold. Purchases use cash, but unsold inventory has not generated revenue and may receive different accounting treatment.
What if variable cost is at least the selling price?
Contribution is zero or negative, so no finite sales volume covers fixed costs. Review price, variable costs, or the business model.
Which fixed and variable costs should I include?
Use fixed costs from one consistent period and include every cost that changes with each unit in variable cost. Split mixed costs into fixed and variable portions where practical.
Does the calculator store my figures?
No. All calculation logic runs locally in your browser, and this calculator does not save or transmit the amounts entered.