How it works
Each sale brings in its price, but part of that goes straight back out as the variable cost of that unit (ingredients, packaging, delivery). What is left, the contribution, pays for your fixed costs: rent, salaries, the generator subscription, internet, accounting.
Break-even units are fixed costs divided by the contribution per unit, rounded up, because you cannot sell half a coffee. Break-even revenue is those units times the price. Every sale after that point is profit.
Add the number of days you open in a month and the calculator also tells you how many sales a day that means, which is the figure you can actually watch at the till.
Worked example
A small bakery has 3,000 USD of fixed costs a month. A box of pastries sells for 5 USD and costs 2 USD in ingredients and packaging, so each box contributes 3 USD.
3,000 divided by 3 is 1,000 boxes, or 5,000 USD of sales, to break even. Open 25 days a month, that is 40 boxes a day. Box 41 on an average day is where profit starts.
Questions and answers
What counts as a fixed cost?
Anything you pay whether you sell or not: rent, salaries, the generator subscription or its fixed fee, internet, software, loan repayments, your accountant. If a cost rises with each sale, it is variable.
I sell many different products. How do I use it?
Use an average: your average ticket as the price, and the average cost of what is in that ticket as the variable cost. Or run it once for your main product to get a feel for the numbers.
Why does it say I can never break even?
Because the price is equal to or below the variable cost. Each sale then adds nothing towards rent and salaries, so selling more does not help. Raise the price or lower the cost per unit first; the margin calculator helps you choose the price.
Should I calculate in dollars or lira?
In the currency most of your costs are in. Keep all three amounts in the same currency. If some costs are in lira and others in dollars, convert them first with the USD and LBP converter.