Introduction
Break-even Calculator
Knowing your break-even point helps you understand how much you need to sell before your business starts generating a profit. Our break-even calculator estimates the number of units you need to sell to cover your fixed and variable costs.
Enter your fixed costs, selling price per unit, and variable cost per unit to calculate your break-even point and break-even revenue.
What Is the Break-even Point?
The break-even point is the level of sales where your total revenue equals your total costs. At this point, the business has neither a profit nor a loss.
Sales above the break-even point can generate a profit, provided your pricing and cost assumptions remain unchanged. Sales below the break-even point generally result in a loss.
Break-even Formula
The basic break-even formula is:
Break-even Units = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)
The amount inside the brackets is the contribution margin per unit.
For example, if you sell a product for $50 and the variable cost is $30, your contribution margin is $20 per unit. If your fixed costs are $10,000, you need to sell 500 units to break even.
How to Use the Calculator
- Enter your total fixed costs.
- Enter your selling price per unit.
- Enter your variable cost per unit.
- Click Calculate Break-even.
- Review your break-even units and break-even revenue.
Worked Example
Suppose a business has:
- $10,000 in fixed costs
- A $50 selling price per unit
- $30 in variable costs per unit
The contribution margin is:
$50 − $30 = $20
The break-even point is:
$10,000 ÷ $20 = 500 units
The business therefore needs to sell approximately 500 units to cover its costs.
At 500 units, revenue would be:
500 × $50 = $25,000
Why Break-even Analysis Matters
Break-even analysis can help business owners evaluate pricing decisions, sales targets, product launches and cost structures.
If your break-even point is too high, you may need to consider increasing prices, reducing variable costs, reducing fixed costs, or finding ways to increase sales volume.
