Financial Analyst & Quantitative Strategist
Determine your business’s critical survival threshold with our Elimination Number Calculator. This tool helps you identify the exact point where revenue offsets costs, ensuring your operations remain viable and profitable.
Elimination Number Calculator
Enter at least three variables to calculate the missing value.
Elimination Number Calculator Formula
The primary formula for the Elimination Number (Break-Even Units) is:
Source: Investopedia | CFI
Variables Explained
- Fixed Costs (F): Costs that do not change with the volume of production (e.g., rent, salaries).
- Price Per Unit (P): The amount of money received for each unit sold.
- Variable Cost (V): The cost incurred for every single unit produced (e.g., raw materials).
- Quantity (Q): The total number of units required to reach the “Elimination” or Break-Even point.
What is the Elimination Number Calculator?
The Elimination Number Calculator is a financial tool used to identify the break-even point of a product or service. In business terminology, the “elimination number” refers to the specific sales volume where total costs are completely eliminated by total revenue, resulting in zero net profit or loss.
By using this calculator, entrepreneurs can set realistic sales targets, determine pricing strategies, and evaluate the feasibility of new projects before investing significant capital.
How to Calculate Elimination Number (Example)
- Identify your total Fixed Costs (e.g., $10,000 for office rent).
- Determine your Selling Price per unit (e.g., $100).
- Calculate the Variable Cost per unit (e.g., $60 for materials).
- Subtract Variable Cost from Price to find the Contribution Margin ($100 – $60 = $40).
- Divide Fixed Costs by the Contribution Margin ($10,000 / $40 = 250 units).
Frequently Asked Questions (FAQ)
What happens if Variable Cost is higher than Price?
If V > P, the business loses money on every unit sold, and an elimination number cannot be reached. You must increase the price or reduce costs.
Is the Elimination Number the same as ROI?
No. The elimination number tells you when you stop losing money, while ROI (Return on Investment) measures the efficiency of a profit-generating investment.
Can I calculate the elimination number for services?
Yes, simply treat “units” as hours of service or number of clients served.
Why is the Elimination Number important for startups?
It defines the “Runway.” Knowing how many units must be sold to cover costs is vital for cash flow management.