Business
Break-even Price Calculator
Cover variable cost plus a share of fixed costs at the volume you expect to sell.
The cheapest you can sell
Break-even price is the selling price that covers fixed costs and variable costs at a stated volume — before you earn a profit. If your volume assumption is optimistic, the price you get is too low for the real world. Use a conservative unit count, especially for new products without demand proof. Percentage marketplace fees belong in variable cost or as a higher target; this version is a simple cash break-even, not a full absorption costing exercise. Once you have a candidate price, test promotions with discount profitability and volume swings with break-even units or break-even scenario. Reverse from margin targets with reverse margin when you already know the percentage you must keep. Planning estimates only — not financial advice. Publish the volume assumption beside the price so sales teams know what must sell for the floor to make sense. Revisit after fee changes on any marketplace you rely on.
Worked example
Fixed costs £4,000 for the month, variable cost £12 per unit, expected volume 500 units. Break-even price = 12 + (4000 ÷ 500) = £20. At £20 you cover cash costs with nothing left for profit or surprises. If you only trust 400 units of demand, break-even rises to £22. A 10% marketplace fee on selling price needs either a higher ticket or the fee folded into variable cost so the equation still closes.
Limits and assumptions
Assumes volume is independent of price — in reality higher prices can cut demand. Ignores working capital, VAT timing and inventory risk. Not a substitute for a full priced bill of materials with scrap rates.
Frequently asked questions
What is break-even price?
The price at which contribution from expected units covers fixed costs, leaving zero profit.
What if price is below variable cost?
You cannot break even by selling more. Raise price, cut variable cost, or stop the line.
How do fees affect the calculation?
Put percentage fees into variable cost per unit so the break-even price covers them.
Should I include my own salary in fixed costs?
If the business must fund that salary, yes — otherwise break-even understates the real bar.
How does this differ from reverse margin?
Reverse margin sets price from a target percentage; break-even price sets the floor from costs and volume.