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Price Change Break-Even Volume Calculator

Is the practice earning what it should for the hours it spends?

Unit sales change needed to keep total contribution margin the same after a price cut or price increase.

  • Runs in your browser
  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Unit sales change needed
33.33%
Volume change that keeps total contribution margin flat
Units needed at the new price
13,333.33
Contribution margin per unit now
$20
Drawn to one scale
Contribution margin per unit now$20
Contribution margin per unit after the change$15
Total contribution margin to hold$200,000
All results
MeasureResult
Unit sales change needed33.33%
Units needed at the new price13,333.33
Contribution margin per unit now$20
Contribution margin per unit after the change$15
Total contribution margin to hold$200,000
StatusOK
How this was worked out
Work shownrecomputed as you type
CM now = price - variable cost
CM after = price x (1 + change) - variable cost
Units needed = current units x CM now / CM after
Volume change = units needed / current units - 1

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • CM now = price - variable cost
  • CM after = price x (1 + change) - variable cost
  • Units needed = current units x CM now / CM after
  • Volume change = units needed / current units - 1

How it works

A price cut comes straight out of contribution margin. At a 40 percent margin, a 10 percent price cut removes a quarter of the margin per unit, so you need a third more units to stand still. A price increase works the other way: you can lose a share of volume and still come out ahead.

Fixed costs do not change the answer, as long as the new volume fits in current capacity. Compare the volume change needed with what you expect customers to do. If expected demand moves less than the break-even change, the price move adds profit.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Why not just use percent change in price?

Margin, not revenue, pays fixed costs. A small price change is a large margin change when margins are thin.

Does this include extra fixed costs?

No. If volume needs new capacity, add its cost and solve again with a target total margin.

What is the formula in percent terms?

Volume change = -change / (margin ratio + change), with both as decimals.

Formulas on this page are the standard definitions.

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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