Accounting Unit Economics Calculator
Calculate revenue, contribution margin, operating profit and break-even volume from your price, unit costs, fixed costs and sales volume.
Overview
Use this Accounting Unit Economics Calculator to estimate the economics of a product or service. Enter your selling price, direct per-unit costs, monthly fixed costs and expected sales volume to see contribution margin, monthly operating profit and the volume needed to break even.
How it works
The calculator adds all direct per-unit costs to find variable cost per unit. It subtracts that figure from the selling price to calculate contribution per unit. Contribution margin shows this amount as a percentage of price. Monthly contribution is contribution per unit multiplied by units sold, and monthly fixed costs are then subtracted to estimate operating profit. Break-even volume is calculated by dividing monthly fixed costs by contribution per unit.
How to use this calculator
- 1Enter the average selling price you receive for one unit.
- 2Add materials, direct labor, fulfillment and sales fees for each unit.
- 3Enter the fixed costs you expect to pay each month.
- 4Enter the number of units you expect to sell in a month.
- 5Review the contribution per unit, estimated operating profit and break-even volume.
Example Calculation
Selling price per unit
$100
Materials cost per unit
$30
Direct labor cost per unit
$15
Fulfillment cost per unit
$5
Sales fees per unit
$5
Monthly fixed costs
$10,000
Expected units sold per month
250
Contribution per unit
$45.00
With variable costs of 55 per unit, each sale contributes 45 toward fixed costs and profit. Selling 250 units produces estimated monthly operating profit of 1,250, and break-even is about 223 units.
Frequently asked questions
What is unit economics?
Unit economics measures the revenue, direct costs and contribution associated with one unit of a product or service. It helps show whether additional sales can contribute to covering fixed costs and profit.
What is contribution per unit?
Contribution per unit is selling price minus variable cost per unit. It is the amount left from each sale to pay fixed costs and, after those costs are covered, generate profit.
What costs should be included as variable costs?
Include costs that rise when you sell another unit, such as materials, direct labor, shipping, packaging, payment fees, commissions and marketplace fees.
What costs are usually fixed costs?
Examples include rent, subscriptions, insurance, salaried administration, regular software charges and baseline marketing commitments that do not change directly with each unit sold.
How is break-even volume calculated?
Break-even volume equals monthly fixed costs divided by contribution per unit. It estimates how many units must be sold before contribution covers the fixed costs entered.
Why can revenue increase while profit remains low?
Revenue does not account for variable and fixed costs. If contribution per unit is small, a large number of sales may be needed before fixed costs are covered.
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Assumptions and warnings
Assumptions
- All entered selling prices and costs use the same currency and are stated before sales taxes.
- Variable costs change in direct proportion to the number of units sold.
- Fixed costs remain constant for the month across the sales volume considered.
- The operating profit estimate excludes income taxes, financing costs, depreciation and costs not entered.
- Results are estimates and depend on the accuracy of the prices, costs and sales volume provided.
Warnings
- This calculator provides an estimate only and is not accounting, tax or financial advice.
- Break-even volume is meaningful only when the contribution per unit is greater than zero.