Finance

Shop Break Even Units Calculator (5 Years)

Find how many units must be sold to break even. This shop version uses a 5-year planning term as its starting point.

In real terms, the Break even units result is the number of units the shop must sell to cover its fixed costs exactly, with no profit and no loss; selling more than this number starts to make a profit, while selling fewer leaves a loss.

Formula

Break even units equal fixed costs divided by price minus variable cost per unit.

How it works

At break even, total revenue exactly covers total costs, with no profit and no loss.

Worked example

Fixed costs $10,000, price per unit $50, variable cost per unit $30, term 5 years. First, the contribution per unit is $50 minus $30, which is $20. Using the page formula, break even units are $10,000 divided by $20, which is 500.00 units. That is the calculator's own result for these defaults, and it is the same on every page in this group because the term is not an input. At break even, revenue is 500 times $50, which is $25,000, variable costs are 500 times $30, which is $15,000, and $25,000 minus $15,000 minus $10,000 of fixed costs leaves zero profit, exactly as break even should. Spread evenly over 5 years, that is about 100.00 units a year, as a planning average only, not a sales target for any single year.

Who this term suits for a shop owner: a newly opened shop fitting out its first premises, such as a till point, shelving and refrigeration, signage, or a point-of-sale upgrade, where the loan must be cleared from shop takings before the fittings themselves wear out.

FAQs

What is break even?
Break even is the point where revenue covers all costs, so profit is zero.

Is this shop calculator exact?
No, it is an estimate for planning only, based on the numbers you enter.

Are these figures financial advice?
No, they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

Is 500 units in 5 years a small target for a new shop?
For a shop open most days, 100 units a year is about two sales a week, so the target itself is small. The real question is whether rent, wages and stock costs stay near the $10,000 fixed figure used here.

What shop costs count as fixed costs in this example?
Rent, staff wages, insurance and equipment costs that do not change with each sale. Stock bought per unit is a variable cost, so it belongs in the $30 figure, not in the $10,000.

What if a new shop sells fewer than 500 units in 5 years?
Then revenue does not cover the $10,000 of fixed costs plus the variable cost of what was sold, so the shop makes a loss on these figures. Either fixed costs must fall, the price must rise, or more units must be sold.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.