Break-Even Calculator
Calculate your break-even point in units and revenue. Essential for business planning.
About Break-Even Calculator
Find the minimum units you need to sell to cover your costs. Enter fixed costs, variable cost per unit, and selling price.
About this calculator
The break-even point is the number of units you must sell before a business stops losing money and starts earning it. Below that number every sale only pays down your fixed costs. Above it, each extra unit adds profit equal to its contribution margin.
Enter your monthly fixed costs, the variable cost of each unit and your selling price. The calculator gives the break-even units, the revenue you need to reach it and the contribution margin, and then shows the profit or loss at the volume you expect to sell. It is the first number to check before you launch a product, sign a lease or hire someone.
How to use it
- Enter your Fixed Costs per month.
- Enter the Variable Cost per Unit.
- Enter the Selling Price per Unit.
- Enter your Expected Units per month.
- Press Calculate Break-Even to see units, revenue, margin and projected profit.
Break-even formulas
Contribution margin = Selling price − Variable cost per unit. Break-even units = Fixed costs ÷ Contribution margin. Break-even revenue = Break-even units × Selling price. Profit at any volume = (Units − Break-even units) × Contribution margin. Round the units up, because you cannot sell part of a unit.
Worked example
Fixed costs $5,000 a month, variable cost $15, price $40
| Contribution margin per unit | $25.00 |
| Contribution margin ratio | 62.5% |
| Break-even units | 200 |
| Break-even revenue | $8,000 |
| Profit at 300 units | $2,500 |
At 300 units, 100 units sit above break-even and each earns $25, which is where the $2,500 comes from. Selling only 150 units would lose $1,250 a month.
Tips and common mistakes
- Fixed costs are the bills you pay whether or not you sell: rent, salaries, software, insurance. Variable costs rise with each unit.
- If the contribution margin is small, a modest rise in price or a modest cut in variable cost moves the break-even point a long way.
- Run the numbers for a pessimistic month as well as a hopeful one. Plan cash for the pessimistic case.
- Break-even is a monthly picture. If your costs change by season, recalculate each season.
- Do not forget your own pay. If you take nothing from the business, your true break-even is higher than the one shown.
Frequently asked questions
What is the break-even point?
The sales volume at which total revenue equals total costs, so profit is zero.
How do I calculate break-even units?
Divide fixed costs by the contribution margin per unit, which is the price minus the variable cost.
What is contribution margin?
The amount each unit contributes towards covering fixed costs and, after break-even, towards profit.
How can I lower my break-even point?
Raise the price, cut variable costs, or reduce fixed costs. Even small changes help when the margin is thin.
Does break-even include tax?
No. It works on pre-tax revenue and costs.
Can I use it for a service business?
Yes. Treat an hour or a project as a unit, with its direct cost as the variable cost.