Break-Even Calculator

Calculate your break-even point — the exact sales volume where revenue covers all costs. Enter fixed costs, variable cost per unit, and selling price to see break-even units, break-even revenue, contribution margin, and how different sales volumes affect profit.

Break-Even Analysis

Break-Even Units—

Break-Even Revenue—

Contribution Margin/Unit—

Contribution Margin %—

Profit at Expected Units—

Margin of Safety—

What Is a Break-Even Point?

The break-even calculator reveals one of the most fundamental business metrics: the exact sales volume at which revenue covers all costs and profit equals zero. Every unit sold beyond break-even generates pure contribution margin profit. Every unit below break-even leaves fixed costs uncovered. Knowing your break-even point is essential for pricing, budgeting, and launch decisions.

Break-Even Formula

Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit. Contribution Margin = Selling Price − Variable Cost per Unit. Break-Even Revenue = Break-Even Units × Selling Price. Example: Fixed costs $50,000, price $25/unit, variable cost $10/unit. Contribution margin = $15/unit. Break-even = $50,000 ÷ $15 = 3,334 units = $83,350 revenue.

Contribution Margin Explained

The contribution margin per unit is how much each sale contributes toward paying fixed costs and generating profit. Before break-even, contributions go entirely toward fixed costs. After break-even, every unit's contribution margin is profit. A higher contribution margin (wider price-to-variable-cost gap) means fewer units are needed to break even.

Impact of Price Changes

A small price increase has an outsized impact on break-even because it directly raises contribution margin without affecting fixed costs. Raising price from $25 to $27 on the example above increases contribution margin from $15 to $17, dropping break-even from 3,334 to 2,941 units — a 12% reduction in break-even for an 8% price increase.

Margin of Safety

The margin of safety is the buffer between your expected or current sales and the break-even point. A 30% margin of safety means sales would need to fall 30% before losses begin — the higher this number, the more resilient the business. New businesses with high fixed costs often operate with a very small margin of safety, making cost control critical.

Frequently Asked Questions

What is a break-even point?

The sales volume where total revenue equals total costs — zero profit or loss. Above break-even, each unit generates profit. Below it, fixed costs are unrecovered and the business runs at a loss.

What is contribution margin?

Selling price minus variable cost per unit. Each unit sold contributes this amount toward fixed costs and then profit. Break-Even Units = Fixed Costs ÷ Contribution Margin per unit.

What are fixed vs. variable costs?

Fixed: don't change with volume (rent, insurance, salaries). Variable: change with each unit (materials, direct labor, commissions, packaging). The distinction is fundamental to break-even analysis.

How do I lower my break-even point?

Raise selling price, reduce variable costs per unit, reduce fixed costs, or combine approaches. Reducing fixed costs has the most direct impact since it lowers the total that must be covered before profitability begins.

What is a margin of safety?

The difference between current/expected sales and break-even sales. Shows how much sales can decline before losses begin. A 30% margin of safety means sales must fall 30% to trigger a loss.