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Break-Even Pricing Calculator

See the lowest price that still covers costs.

Result

$16.00
$8.00
$8.00

How it is calculated

The tool spreads the fixed costs over the expected sales and adds the cost of making each unit: break-even price = fixed costs ÷ units + variable cost per unit. The fixed costs are the total you must pay for the period whatever you sell, such as rent and salaries, in dollars. The variable cost per unit is what each extra unit costs you, such as materials and packaging. Units is the quantity you expect to sell in that same period. It must be above zero, and costs cannot be negative. The fixed portion per unit is shown separately. The price covers costs exactly with zero profit, so any margin has to be added on top. The result is only valid if you really sell the number of units entered.

Worked example

A small business has 12000 of fixed costs for the period, spends 8 on each unit and expects to sell 1500 units. Step 1: fixed cost per unit = 12000 ÷ 1500 = $8.00. Step 2: add the variable cost of 8. Step 3: break-even price = 8 + 8 = $16.00. At that price, 1500 units bring in 24,000, which covers 12,000 fixed plus 12,000 variable. If only 750 units sell, the fixed share doubles to $16.00 and the break-even price rises to $24.00.

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Common mistakes

  • Treating the result as the price to charge. It has zero profit built in, so any margin comes on top.
  • Putting a per-unit cost in the fixed costs box, or the total variable cost in the per-unit box. Fixed is a period total; variable is per single unit.
  • Using a hopeful sales volume. If actual sales are lower, the true break-even price is higher, since the fixed costs spread over fewer units.
  • Leaving out costs such as payment fees, shipping or returns that behave like variable costs, which makes the price too low.
  • Mixing periods, such as fixed costs for a year against units for a month.

About this calculator

Break-even pricing finds the minimum price per unit a business must charge at a given sales volume to cover all costs — fixed costs (rent, salaries, equipment that don't change with output) plus variable costs (materials, per-unit labor, packaging that scale with each unit sold) — with zero profit or loss. The formula is price = (fixed costs / expected unit volume) + variable cost per unit, so the price needed to break even falls as expected volume rises, since fixed costs get spread across more units.

Small business owners, product managers, and manufacturers use it when launching a new product to set a pricing floor, when negotiating a bulk order to know the lowest acceptable per-unit price, or when volume drops and they need to know how much prices must rise to stay at break-even.

Spread fixed costs over the volume you expect to sell, add the variable cost per unit, and you have the lowest price per unit that still breaks even.

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