Rent, salaries, the licence — costs that do not move with volume
Materials, packaging, commission — the cost of one more
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How far sales can fall before the loss starts
The contribution margin is the answer. The unit count is a consequence of it.
Price less variable cost — that is what each sale contributes towards the fixed costs. Every other figure here is the fixed costs divided by that one number.
Milk tea: ₱130 a cup, ₱45 of ingredients and packaging. ₱85 contributed per cup. Against ₱80,000 a month of rent and wages, 80,000 ÷ 85 = 942 cups.
If the contribution were ₱2, you would need 40,000 cups. That is worth knowing before the unit count, not after it.
And if the price is at or below the variable cost, there is no break-even at all. Every extra sale deepens the loss — volume makes it worse, not better. That is said here in words rather than returned as an enormous number that looks like an answer.
It is the price of one unit less the cost of making one more — what each sale contributes towards covering the fixed costs. Every other figure on the page is the fixed costs divided by it, so it is the number that decides whether the business works at all. If each cup of milk tea contributes ₱85, ₱80,000 of monthly fixed costs needs 942 cups. If it contributed ₱2, you would need 40,000, and that is worth knowing before the unit count rather than after it.
Fixed costs do not move when you sell one more: rent, salaried staff, the business permit, the internet. Variable costs are what one additional unit costs you: ingredients, packaging, the card fee, a per-sale commission. The awkward ones sit in between — an hourly worker is fixed until you need overtime, and electricity has a base charge plus usage. Put the base in fixed and the per-unit part in variable.
Because when the price is at or below the variable cost there is no break-even point to give. Each additional sale either contributes nothing or loses money, so volume makes the situation worse rather than better and no quantity ever covers the fixed costs. That is the most important thing a break-even calculation can tell you, so it is said in words rather than returned as an enormous number that looks like an answer.
Because a fraction of a unit does not clear the fixed costs. If the exact figure is 1,249.3, then at 1,249 units you are still making a loss — small, but a loss. Rounding down would put the break-even point inside the red. You also cannot sell 0.3 of most things.
How far sales can fall from what you expect before you start losing money, as a percentage. Expecting 1,500 units against a break-even of 942 gives you about 37% — sales could drop by more than a third and you would still be level. Below 20% is generally treated as thin. It only appears if you tell the calculator what you expect to sell, because without an expectation there is nothing to be safe by.
No, and the page says so. It assumes the price and the per-unit cost hold at every volume, and in practice they do not: suppliers give bulk discounts, a second shift costs overtime, and a bigger space costs more rent. Treat it as the shape of the problem — how sensitive the business is to volume — rather than a prediction of a particular month.
Runs entirely in your browser; nothing is transmitted. This is not a forecast — it assumes the price and the per-unit cost hold at every volume, which bulk discounts, overtime and a bigger space all change. Units are rounded up, because a fraction of a unit does not clear the fixed costs. Nothing you type here is sent to our servers — the calculation runs entirely in your browser.
