How Much Do You Need to Sell to Cover Your Costs?
If you’re running a small business, launching a product, or just exploring a side hustle, one essential question is: How much do I need to sell to break even?
This article explains how to calculate your break-even point and includes a simple calculator you can use to estimate your own numbers.
Table of Contents
Use the calculator below to find the break even sales number.
๐งฎ Break-Even Sales Calculator
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๐ What Is Break-Even Sales?
Break-even sales is the amount of revenue you need to generate to cover your total costsโwithout making a profit or a loss. Once you pass this point, any additional sales start generating profit.
Key Terms
Fixed Costs
Costs that stay the same regardless of how much you sell (e.g., rent, software subscriptions, salaries)
Variable Costs
Costs that change with each unit sold (e.g., packaging, shipping, production)
Selling Price per Unit
The price you charge for one unit of your product or service
๐ Formula: Break-Even in Units
To calculate how many units you need to sell to break even, use this formula:
Break-Even Units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
๐ข Formula: Break-Even in Sales Revenue
To calculate how much revenue you need to generate to break even:
Break-Even Sales = Break-Even Units ร Selling Price per Unit
๐ต Example
Imagine you sell a product for $50, and your costs are:
- Fixed Costs: $2,000/month
- Variable Cost per Unit: $20
Using the formula:
Break-Even Units = 2000 / (50 - 20)
Break-Even Units = 2000 / 30
Break-Even Units = 66.67 โ You need to sell at least 67 units
To find the sales revenue:
Break-Even Sales = 67 ร 50 = $3,350
โจ Why Break-Even Sales Matter
- Helps you price your product properly
- Sets a clear minimum sales target
- Shows when your business becomes profitable
- Essential for budgeting, forecasting, and investor planning