Break-Even Calculator
See how many units you need to sell before a product or business covers its costs. Enter your fixed costs, the selling price per unit and the variable cost per unit to get the break-even point in units and revenue, along with the contribution margin behind it.
Inputs
Results
Break-even units = fixed costs divided by (price minus variable cost per unit), rounded up to whole units. Break-even revenue uses the exact unrounded figure.
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How the break-even point is worked out
The break-even point is where total revenue first covers total costs. This calculator uses the standard contribution margin method: every unit you sell contributes its price minus its variable cost towards your fixed costs, and once those contributions add up to the fixed costs, you have broken even. Units needed equals fixed costs divided by the contribution per unit.
The calculator reports the break-even point in whole units, rounded up because you cannot sell a fraction of a unit, alongside the break-even revenue and the contribution margin ratio. The ratio, contribution divided by price, tells you what share of every pound of sales is available to cover fixed costs and then become profit.
If the variable cost per unit is at or above the price, each sale loses money and no volume of sales can break even. The calculator flags this case explicitly rather than showing a misleading number.
How to use the break-even calculator
- Enter your fixed costs for the period you care about, such as a month or a year: rent, salaries, insurance, subscriptions.
- Enter the selling price of one unit.
- Enter the variable cost of one unit: materials, packaging, payment fees, per-unit shipping.
- Read the break-even units and revenue, and check the contribution margin to see how much each sale really earns.
Worked examples
12,000 of fixed costs, 25 price, 10 variable cost
Inputs: Fixed costs 12,000, price per unit 25, variable cost per unit 10.
Result: Each unit contributes 15, so break-even is 800 units or 20,000 of revenue, with a contribution margin of 60 percent.
The same business after a 2 price rise
Inputs: Fixed costs 12,000, price 27, variable cost 10.
Result: Contribution rises to 17 and break-even falls to 706 units, about 12 percent fewer sales needed from an 8 percent price rise.
Limitations and common mistakes
Edge cases and limitations
- It assumes one product at one price with a constant variable cost; a mix of products needs a weighted average contribution per unit.
- Fixed costs are treated as truly fixed across the volume range, but in reality they step up when you outgrow premises or need another hire.
- Break-even says nothing about demand. The market may not want the number of units the arithmetic requires at that price.
- Taxes, volume discounts and bulk purchasing effects on unit cost are not modelled.
Common mistakes
- Classifying a cost as fixed when it scales with sales, such as payment processing fees, which understates the variable cost and flatters the break-even point.
- Comparing a monthly fixed cost figure with an annual sales target. Keep the period consistent on both sides.
- Treating break-even as the goal. It is the floor; pricing and volume plans should target comfortably above it.
Frequently asked questions
How is the break-even point calculated?
Divide your fixed costs by the contribution margin per unit, which is the selling price minus the variable cost of each unit. If fixed costs are 12,000, the price is 25 and the variable cost is 10, each sale contributes 15, so you break even at 800 units, which is 20,000 of revenue.
What counts as a fixed cost versus a variable cost?
Fixed costs stay the same whatever you sell: rent, salaries, insurance, software subscriptions. Variable costs scale with each unit: materials, packaging, payment processing fees, per-unit shipping. If a cost rises when you sell one more unit, treat it as variable.
What does it mean if my break-even point looks impossibly high?
It means the contribution per unit is too small for your fixed costs. The three levers are raising the price, cutting the variable cost per unit, or reducing fixed costs. Even a small price rise can cut the break-even point sharply because every unit's contribution grows.
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