Break-Even Calculator
The break-even point is the sales volume where total revenue equals total cost. Enter fixed costs, price per unit and variable cost per unit to see the units and revenue needed before profit begins.
Last reviewed: 2026-07-01
Results
Enter your figures above and select Calculate. Results appear here with clear labels — never colour alone.
What is a break-even point?
The break-even point is the level of sales at which total revenue exactly equals total cost: no profit, no loss. Below it you are funding the shortfall from savings or borrowing; above it every additional sale contributes profit. It converts an abstract worry — “can this work?” — into a concrete, checkable number of units.
The mechanism is contribution margin. Each sale contributes its price minus its variable cost towards the fixed costs you owe regardless of activity. Break-even is simply the point at which those contributions have covered the fixed costs in full.
Break-even units formula
- Contribution Margin per Unit = Price − Variable Cost
- Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit
- Break-Even Revenue = Break-Even Units × Price
If contribution margin per unit is zero or negative, there is no break-even volume: the price must rise or the variable cost must fall first.
Break-even revenue formula
- Break-Even Revenue = Break-Even Units × Selling Price per Unit
Break-even revenue can also be calculated directly as Fixed Costs ÷ Contribution Margin Ratio, where Contribution Margin Ratio = Contribution Margin per Unit ÷ Price.
Worked example
A workshop has monthly fixed costs of $20,000. It sells a product for $50, with materials and shipping of $30 per unit.
- Contribution Margin = 50 − 30 = 20
- Contribution Margin Ratio = (20 ÷ 50) × 100 = 40.00%
- Break-Even Units = 20,000 ÷ 20 = 1,000
- Break-Even Revenue = 1,000 × 50 = 50,000
With a target profit of $10,000:
- Target Units = (20,000 + 10,000) ÷ 20 = 1,500
Because you cannot sell a fraction of a unit, break-even units are always rounded up: 1,000 sales per month clears costs, and the 1,001st begins contributing profit.
Contribution margin explanation
Contribution margin per unit is what each sale contributes towards fixed costs after its own variable costs are paid. It is the engine of break-even analysis. A higher contribution margin means fewer sales are needed to break even; a lower one means more volume is required. The contribution margin ratio expresses the same idea as a percentage of price, which is useful when you want to work in revenue rather than units.
Target profit calculation
To find the units needed for a specific profit, treat the target profit as an additional fixed cost. The formula becomes: Target Units = (Fixed Costs + Target Profit) ÷ Contribution Margin per Unit. The calculator rounds this up to the next whole unit.
How to use this calculator
- Total your fixed costs for a single period, usually one month.
- Enter the average price you genuinely receive per unit, after typical discounts.
- Enter the variable cost of producing and delivering one more unit.
- Optionally enter a target profit to see the units needed to reach it.
- Optionally enter expected unit sales to see estimated profit and margin of safety.
- Select Calculate to see break-even units and break-even revenue.
Try a pessimistic scenario as well as your expected one — a 10% price reduction often moves the break-even volume more than people expect.
How to interpret the result
Compare the break-even volume with what you can realistically sell and fulfil. If it sits far above your current sales, the options are higher prices, lower variable costs, reduced fixed costs, or a longer runway of funding. If it is comfortably below, you have room to invest in growth — but check whether that investment adds fixed costs and moves the point again.
If you entered expected unit sales, the margin of safety shows how far sales could fall before you drop below break-even. A large margin of safety means resilience; a small one means even a modest downturn turns profitable trading into a loss.
Break-even says nothing about profitability beyond the threshold. Pair it with the profit margin calculator to see what each sale beyond break-even actually earns.
Limitations of break-even analysis
Break-even analysis assumes the selling price and variable cost per unit stay constant across all volumes. In reality, bulk discounts, capacity limits and stepped fixed costs (such as needing a second warehouse above a certain volume) all bend the line. It also treats fixed costs as truly fixed, which is only true within a relevant range of activity. Use it as a planning tool, not as a substitute for a cash flow forecast.
Common mistakes
- Classifying costs loosely. Commission and payment fees are variable, not fixed.
- Using list price instead of realised price. Discounts and promotions lower contribution margin.
- Mixing periods. Annual fixed costs with a monthly sales assumption overstates the challenge twelvefold.
- Forgetting your own salary. If you need to be paid, it is a fixed cost.
- Assuming one price for all volume. If bulk buyers pay less, model them separately, then check pricing with the markup calculator.
Frequently asked questions
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Disclaimer
Results from this calculator are estimates for general information only and are not financial, accounting, tax, investment or legal advice. Verify important figures with a qualified professional. Read our full disclaimer.