What is the break-even point?

The break-even point is the sales volume at which total revenue exactly equals total cost (fixed + variable). Below this volume you lose money; above it you make a profit.

What is contribution margin?

Contribution margin per unit is the selling price minus the variable cost per unit. It represents the amount each unit sold contributes toward covering fixed costs — and, after the break-even point, toward profit.

Why must price exceed variable cost?

If the price is less than or equal to the variable cost, every unit sold loses money on the variable side, so no quantity of sales can ever cover the fixed costs. The break-even point is mathematically undefined.

Does this include taxes?

This calculator computes the operating (pre-tax) break-even point. To find the units required for a target after-tax profit, divide the target pre-tax profit (target after-tax profit / (1 − tax rate)) by the contribution margin per unit and add it to break-even units.