Break-Even Calculator

1. Enter your total fixed costs.
2. Enter the price per unit you sell at.
3. Enter the variable cost per unit to make it.
4. Read the break-even units, revenue and contribution margin.

Here is what each result means:

The break-even point is the level of sales at which a business exactly covers its costs, making neither a profit nor a loss. Sell fewer units than this and you lose money; sell more and you start to profit. It is one of the first numbers any new business or product should work out, because it shows the minimum sales needed to survive.

The calculation splits costs into two kinds. Fixed costs, such as rent and salaries, stay the same no matter how much you sell. Variable costs, such as materials, rise with each unit made. The difference between the selling price and the variable cost of one unit is the contribution margin, the amount each sale contributes toward covering the fixed costs.

Break-even units are simply the fixed costs divided by that contribution margin. Once you have sold enough units for their combined contribution to equal the fixed costs, every further sale is profit. This makes the break-even point a clear, motivating target and a quick test of whether a price is high enough to be viable.

It divides fixed costs by the contribution margin per unit.

1. Find the contribution margin: price per unit minus variable cost per unit.
2. Divide the fixed costs by that contribution margin to get break-even units.
3. Multiply break-even units by the price to get break-even revenue.

Break-even sits alongside pricing and margin tools; see the percentage calculator and the finance hub.

A shop has 10,000 in fixed costs, sells each unit for 50 and pays 30 to make it.

Calculation: the contribution margin is 50 minus 30, which is 20. units = 10000 / 20 = 500. So it must sell 500 units, or 25,000 in revenue, to break even. Every unit after that adds 20 in profit.

Each input plays a clear role in the result.

The contribution margin is the engine of the calculation. A larger margin means each sale covers more of the fixed costs, so you break even at fewer units. A thin margin pushes the break-even point higher and makes the business more sensitive to slow sales.

Three levers move the break-even point, each with trade-offs.

Cutting fixed costs and widening the contribution margin both reduce the units needed to break even. Raising the price helps too, but only if customers keep buying, so it must be weighed against the risk of losing sales. The best plan usually combines small moves on all three.

The Fixed Costs

Higher fixed costs raise the break-even point, since more units are needed to cover them.

The Contribution Margin

A wider margin between price and variable cost lowers the break-even point sharply.

The Price

A higher price raises the contribution margin, but may reduce how many units you can sell.

Starting a Business

Check the minimum sales needed before a new venture is viable.

Launching a Product

See how many units must sell to recover the fixed investment.

Setting Prices

Test how a price change moves the sales target you must hit.

1. Mixing Fixed and Variable Costs

Fixed costs stay the same with output; variable costs rise per unit. Sorting them wrong distorts the result.

2. Price Below Variable Cost

If the price is at or below the variable cost, each sale loses money and you never break even.

3. Forgetting to Round Up

You cannot sell a fraction of a unit, so round the break-even units up to the next whole number.

4. Ignoring Changing Costs

The formula assumes a constant price and cost per unit. Bulk discounts change the picture.

5. Leaving Out Some Fixed Costs

Include every fixed cost, such as rent, salaries, insurance and loan payments.

The relation is exact for the model; break-even units are shown to two decimals and should be rounded up in practice.

The break-even point is the number of units you must sell to cover all your costs, making neither a profit nor a loss. Below it you lose money; above it you profit.

Divide the fixed costs by the contribution margin, which is the price per unit minus the variable cost per unit. With 10,000 fixed costs and a 20 margin, you break even at 500 units.

The contribution margin is the price of one unit minus its variable cost. It is the amount each sale contributes toward covering the fixed costs, and then toward profit.

Break-even revenue is the break-even units multiplied by the price per unit. It is the total sales value you need to cover all costs.

Because the contribution margin must be positive. If the price is at or below the variable cost, every sale loses money and the business can never break even.

Cut fixed costs, widen the contribution margin by raising the price or cutting variable cost, or a mix of these. A wider margin lowers the units needed most directly.

Yes. You cannot sell part of a unit, so round up to the next whole number to be sure of fully covering your costs.

No. It assumes a single product with one price and one variable cost. For a product mix you would use a weighted average contribution margin.

No. The calculation runs in your browser and nothing you enter is stored or sent anywhere, unless you choose Save, which keeps the result only on this device.

• Break-even (economics) (Wikipedia).
• Contribution margin (Wikipedia).
• Cost-volume-profit analysis (Wikipedia).