⚖️ Break-Even Calculator
Find how many units you need to sell, and how much revenue you need, before your business starts making a profit.
Quick answer: Break-even units = fixed costs ÷ (price − variable cost per unit). For example, $12,000 of fixed costs with a $50 price and $30 variable cost gives a $20 contribution margin, so you break even at 600 units, or $30,000.00 in sales.
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Break-Even Calculator inputs
Result
Break-even point
600 units
$30,000.00 in sales covers $12,000.00 of fixed costs
| Price per unit | $50.00 |
| Variable cost per unit | −$30.00 |
| Contribution margin per unit | $20.00 |
- Break-even revenue
- $30,000.00
- Contribution margin ratio
- 40%
- Exact break-even
- 600 units
Profit or loss at different sales volumes
| Units sold | Revenue | Total costs | Profit / loss |
|---|---|---|---|
| 300 | $15,000.00 | $21,000.00 | -$6,000.00 |
| 450 | $22,500.00 | $25,500.00 | -$3,000.00 |
| 600 | $30,000.00 | $30,000.00 | $0.00 |
| 750 | $37,500.00 | $34,500.00 | $3,000.00 |
| 900 | $45,000.00 | $39,000.00 | $6,000.00 |
| 1,200 | $60,000.00 | $48,000.00 | $12,000.00 |
What is the break-even point?
The break-even point is the sales volume at which total revenue exactly equals total costs, so there is neither profit nor loss. It is a basic test of whether a product, project or new business is viable and how much risk it carries.
Break-even formulas
Contribution margin = Price − Variable cost · Break-even units = Fixed costs ÷ Contribution margin · Break-even revenue = Break-even units × Price
Example: a small workshop has $12,000 of monthly fixed costs. Each item sells for $50 and costs $30 in materials and labour, leaving a $20 contribution margin (a 40% ratio). Break-even = 12,000 ÷ 20 = 600 units, or $30,000 in sales. Selling 750 units would earn 150 × $20 = $3,000 profit.
Using the result
- Margin of safety: how far expected sales exceed break-even. If you expect 800 units, your margin of safety is 200 units (25%).
- Target profit: add the profit you want to the fixed costs before dividing. For $4,000 profit: (12,000 + 4,000) ÷ 20 = 800 units.
- Pricing decisions: raising the price to $55 lifts the contribution to $25 and cuts break-even to 480 units.
Limitations
The model assumes a constant price and variable cost per unit and fixed costs that stay put. In reality, discounts, bulk-buying savings and step changes in overheads (a second shift, a bigger unit) shift the line, so rerun the numbers for each scenario. If you sell several products, use a weighted-average contribution margin based on your sales mix.
Estimates for educational purposes, not financial or tax advice.
Frequently asked questions
What is the contribution margin?
It is the amount each unit contributes towards fixed costs and profit: selling price minus variable cost per unit. Once fixed costs are covered, every further unit adds its full contribution margin to profit.
How do I calculate break-even in sales revenue?
Divide fixed costs by the contribution margin ratio (contribution margin ÷ price). With $12,000 fixed costs and a 40% ratio, break-even revenue is $30,000.
What counts as a fixed cost?
Costs that do not change with output in the short term – rent, salaried staff, insurance, software subscriptions and loan repayments. Costs that rise with each unit, such as materials or sales commission, are variable.
How can I lower my break-even point?
Raise prices, cut the variable cost per unit, or reduce fixed overheads. Because the contribution margin is in the denominator, even small price increases can lower the break-even point sharply.