Break-Even Calculator

Find how many units you need to sell to cover your costs.

Fixed costs ($)

Selling price per unit ($)

Variable cost per unit ($)

Break-even units

334

Break-even revenue

$16,700

Contribution margin

$30.00

Contribution margin %

60.0%

What is the break-even point?

The break-even point is the level of sales at which total revenue exactly equals total costs — you are making neither a profit nor a loss. Every unit sold beyond the break-even point generates pure profit; every unit below it represents a loss. Understanding your break-even point is fundamental to pricing, budgeting, and evaluating whether a business or product line is viable.

Break-even analysis is used in new product launches, pricing decisions, expansion planning, and crisis management. It gives a concrete sales target — a minimum threshold the business must hit before it can be considered financially sustainable.

The break-even formula

Break-even units = Fixed costs ÷ Contribution margin per unit
Contribution margin = Selling price − Variable cost per unit

Break-even revenue = Break-even units × Selling price

Worked example: A business with $10,000 monthly fixed costs, a selling price of $50, and a variable cost of $20 per unit:

Contribution margin = $50 − $20 = $30
Break-even units = $10,000 ÷ $30 = 334 units
Break-even revenue = 334 × $50 = $16,700

Fixed costs vs. variable costs

Fixed costs	Variable costs
Rent & office	Raw materials
Salaries (permanent staff)	Packaging & shipping
Insurance	Sales commissions
Loan repayments	Transaction fees
Software subscriptions	Freelancer costs per project
Equipment depreciation	Direct labour per unit

Some costs are “semi-variable” — they have a fixed component and a variable one. Electricity has a fixed standing charge plus a per-unit consumption cost. A sales team has fixed salaries plus variable commissions. For break-even analysis, split these into their fixed and variable components.

How to lower your break-even point

Raise your price

Each $1 increase in price raises the contribution margin by $1, reducing units needed to break even. A 10% price increase is often more impactful than a 10% volume increase.

Cut variable costs

Negotiate better supplier rates, reduce packaging, or improve production efficiency. Lower variable costs increase the contribution margin directly.

Reduce fixed costs

Move to a smaller office, renegotiate leases, automate to reduce headcount, or cut non-essential subscriptions. Every $1,000 reduction in monthly fixed costs reduces break-even volume.

Increase volume

While this doesn't change the break-even point itself, selling well above break-even increases the margin of safety — how much sales can fall before you lose money.

Break-even analysis limitations

It assumes constant prices and costs. In reality, suppliers offer volume discounts, prices may vary by customer, and fixed costs change over time. The model is a simplification.
It ignores time. Break-even analysis is typically static — it does not account for when costs are incurred vs when revenue arrives. Cash flow timing matters in practice.
It assumes all output is sold. If you produce 400 units but only sell 300, unsold inventory carries cost without generating contribution margin.
Breaking even is not the goal — profit is. The break-even point is a floor, not a target. A business planning to break even is planning to make no money. Always model a target profit above break-even.

Frequently asked questions

What is the break-even point?

It is the level of sales where total revenue equals total costs, so you make neither a profit nor a loss. Beyond it, each sale contributes profit.

How do I calculate break-even in units?

Divide fixed costs by the contribution margin per unit (selling price minus variable cost per unit). The result is how many units you must sell to cover costs.

What is the contribution margin?

It is the selling price minus the variable cost per unit — the amount each sale contributes toward covering fixed costs and then profit.

Why is the break-even point useful?

It tells you the minimum sales needed to avoid a loss, helps set prices and targets, and shows how changes in costs or price affect viability.

What this tool does

Calculates the break-even point — how many units you need to sell before your business covers all costs and starts making a profit. Essential for pricing decisions and business planning.

Input fields explained

Fixed costs

Costs that stay the same regardless of how much you produce or sell: rent, salaries, insurance, software subscriptions, loan repayments.

Selling price per unit

The price at which you sell each unit or service to customers.

Variable cost per unit

Costs that change with each unit sold: raw materials, packaging, payment processing fees, shipping, manufacturing labor.

💡 Tips & context

→Contribution margin = selling price − variable cost. This is how much each sale contributes to covering fixed costs.

→Lower your variable costs or raise your price to reduce your break-even point.

Formula / How it works

Break-even units = Fixed costs ÷ (Price − Variable cost per unit) The contribution margin (Price − Variable cost) is how much each sale contributes to covering fixed costs.