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Break-Even Calculator

Enter your fixed costs, the selling price per unit and the variable cost per unit, plus an optional profit target. The calculator shows the break-even point in units and revenue, the contribution margin per unit and as a ratio, and the sales needed for your target. With $50,000 of fixed costs, a $25 price and a $15 variable cost, you break even at 5,000 units or $125,000 of revenue.

Your numbers

Optional: units needed to reach this profit.

Results

Break-even units

5,000

Break-even revenue

$125,000.00

Contribution margin per unit
$10.00
Contribution margin ratio
40%
Show the working
  1. Break-even pointQ = F ÷ (P − V) = $50,000.00 ÷ ($25.00 − $15.00) = 5,000
Paper and orientation

How to use the break-even calculator

  1. Enter your fixed costs for the period, such as a month or a year.
  2. Enter the selling price per unit.
  3. Enter the variable cost per unit: materials, packaging, payment fees, shipping.
  4. Optionally enter a target profit.
  5. Read the break-even units and revenue, the contribution margin and the units needed for your target.

Formulas

  • Contribution margin = price − variable cost.
  • Contribution margin ratio = contribution margin ÷ price.
  • Break-even units = fixed costs ÷ contribution margin, rounded up.
  • Break-even revenue = break-even units × price, or fixed costs ÷ contribution margin ratio.
  • Units for a target profit = (fixed costs + target) ÷ contribution margin.

Worked example

Fixed costs $50,000, price $25, variable cost $15:

  • Contribution margin: $10 per unit (40%).
  • Break-even: 5,000 units, or $125,000 of revenue.
  • For a $20,000 profit: (50,000 + 20,000) ÷ 10 = 7,000 units.

Using break-even analysis

Break-even analysis helps with pricing, launching products and deciding whether to take on new fixed costs. If you raise the price to $27, the margin becomes $12 and break-even falls to about 4,167 units. If you add $10,000 of fixed costs, break-even rises by 1,000 units at the same margin. Try changes one at a time to see which lever matters most.

Tips and common mistakes

  • Classify costs carefully; misclassifying a variable cost as fixed distorts the result.
  • Use the same period for fixed costs and sales.
  • Include all variable costs, including card fees and returns.
  • Check capacity: can you actually produce and sell the break-even volume?
  • Revisit regularly as costs and prices change.

Margin of safety

Once you know break-even, compare it with your expected sales. If you expect 6,000 units and break even at 5,000, your margin of safety is 1,000 units, or about 17%. That is how far sales can fall before you make a loss. A larger margin of safety means a more resilient business.

Break-even for services

The same method works for service businesses. Treat an hour, a session or a project as the unit: price is what you charge per unit, and variable cost is what each unit costs you directly, such as materials, travel or platform fees. Fixed costs are your monthly overheads. The result tells you how many hours or projects you need each month just to cover costs.

Limitations

The model assumes a single product (or a stable sales mix), a constant price and a constant variable cost per unit. Real costs can change with volume, and taxes are not included.

Frequently asked questions

What is the break-even point?

The sales level at which total revenue equals total costs, so profit is zero. Above it you make a profit; below it, a loss.

What is contribution margin?

Price minus variable cost per unit: what each sale contributes towards fixed costs and then profit. At $25 price and $15 variable cost, it is $10, or 40% of the price.

What is the formula?

Break-even units = fixed costs ÷ (price − variable cost). Units for a target profit = (fixed costs + target) ÷ (price − variable cost).

What counts as a fixed cost?

Costs that don’t change with sales volume in the short term: rent, salaries, insurance, software subscriptions and loan repayments.

What if price is below variable cost?

Then each sale loses money and there is no break-even point. The calculator warns you; raise the price or cut variable costs.

Sources