Break-even calculator
How many sales a month cover your fixed costs?
The example numbers are Nora's from block 1: a made-up one-person bakery that sells cinnamon buns for $4. Change them to yours: the numbers stay in this browser and are not sent anywhere.
Result for the example
- Margin per item
- $2.50price - variable costs per item
- Break-even
- 280 items a monthfixed costs / margin per item, rounded up
- Break-even per week
- about 70 itemsbreak-even / 4 weeks, rounded up
- Profit per month
- $1,300margin x 800 items - fixed costs
- You sell 800 items a month: 520 above break-even. Each extra sale adds $2.50 to profit.
- Dividing by the price instead of the margin would give 175: too few. Each sale covers fixed costs only with its margin.
A simple teaching calculator with the formulas of the course. It leaves out taxes, seasons and much of real life, and it is not financial advice.
How it works
Break-even = fixed costs / (price - variable costs per item), rounded up
Each sale first pays for its own variable costs: ingredients, packaging, fees. What is left, the margin per item, goes towards the fixed costs. Break-even is the number of sales at which those margins add up to the fixed costs: profit is zero.
Nora sells a bun for $4.00. Ingredients, a bag and the card fee cost $1.50, so each bun adds $2.50. Her kitchen, market stall and phone cost $700 a month. $700 / $2.50 = 280 buns a month, about 70 a week. She sells 800, so she is 520 buns above break-even and makes $1,300.
A common mistake: Dividing the fixed costs by the price. $700 / $4.00 = 175 buns looks fine, but each bun covers fixed costs only with its $2.50 margin.
Practise this in block 1
Block 1 of Ownwise is free, with no account needed to start: short lessons on costs, margin and break-even, then a made-up case where you make the decisions and see what they lead to.