Break-Even Calculator
The Point Where a Business Stops Losing Money
Every unit sold before break-even is paying down fixed costs; every unit sold after it is profit. Break-even analysis identifies exactly where that line sits, expressed in units and in revenue, so a founder pricing a new product or a manager evaluating a cost increase can see immediately how many sales are required just to reach zero.
The Formula
Break-Even Units = Fixed Costs / Contribution Margin
Break-Even Revenue = Break-Even Units × Price per Unit
The contribution margin is what's left from each unit sale after variable costs are covered — the amount that goes toward paying off fixed costs and, beyond break-even, toward profit.
Why the Contribution Margin Ratio Matters
The contribution margin expressed as a percentage of price (the contribution margin ratio) shows how efficiently each sales dollar covers fixed costs. A thin contribution margin means a small swing in volume has an outsized effect on how close the business sits to break-even.
| Fixed costs | Price/unit | Variable cost/unit | Break-even units | Break-even revenue |
|---|---|---|---|---|
| $10,000 | $50 | $30 | 500 | $25,000 |
| $25,000 | $120 | $45 | 333.3 | $40,000 |
| $8,000 | $15 | $9 | 1,333.3 | $20,000 |
| $60,000 | $250 | $100 | 400 | $100,000 |
Where Break-Even Analysis Matters
- Launching a product — determine how many units need to move before the launch investment is recovered.
- Evaluating a price change — a lower price raises the break-even unit count even if it increases total volume, so it's worth checking both directions.
- Comparing suppliers — a cheaper variable cost per unit lowers the break-even point directly, independent of any pricing decision.
- Setting sales targets — break-even units serve as the floor for any realistic sales quota.
How to Use This Calculator
- Enter your Fixed Costs ($) — rent, salaries, and other costs that don't change with volume.
- Enter the Price per Unit ($) you plan to charge.
- Enter the Variable Cost per Unit ($) — materials, direct labor, and other per-unit costs.
- Select Calculate to see break-even units, break-even revenue, and the contribution margin ratio.
Related Calculations
Pair this with the Profit Margin Calculator to see how margin evolves past the break-even point, or the Markup Calculator when setting the price per unit itself.