Break-Even Calculator
The break-even point is the sales volume at which revenue exactly covers total costs — neither profit nor loss. Knowing it helps you price products, set sales targets, and understand how much cushion you have before a business becomes unprofitable.
How this calculator works
Break-Even Units = Fixed Costs / (Price per Unit − Variable Cost per Unit). The denominator is called the Contribution Margin per unit — the amount each sale contributes toward covering fixed costs. Once fixed costs are covered, each additional unit sold at that margin becomes profit.
Formula reference: Investopedia: Break-Even Analysis
Example
Example: $12,000 monthly fixed costs (rent, salaries, insurance), $8 variable cost per unit (materials, packaging), $20 selling price. Contribution margin = $12. Break-even = $12,000 / $12 = 1,000 units/month. Revenue at break-even: $20,000.
Frequently asked questions
- What counts as a fixed cost vs. a variable cost?
- Fixed costs do not change with output: rent, salaries, insurance, software subscriptions. Variable costs scale directly with each unit produced or sold: raw materials, packaging, per-transaction fees, shipping. Some costs (utilities, overtime) are semi-variable and require judgment.
- How does pricing affect the break-even point?
- Price increases have a large impact: raising price by $2 in the example above grows the contribution margin from $12 to $14, cutting the break-even from 1,000 units to about 857 — an 14% reduction for a 10% price increase. This is why pricing is often more powerful than cost-cutting.
This calculator provides estimates for general informational purposes only and does not constitute financial, tax, or legal advice. Always confirm important numbers with a qualified professional or your lender/institution before making a decision.