Break-Even Point Calculator
Enter your fixed costs, price per unit, and variable cost per unit to find exactly how many units and how much revenue you need to break even. Use it to test pricing, plan a product launch, or size up a new fixed expense before you commit.
How the break-even calculator works
Your break-even point is the sales level where total revenue exactly equals total costs — the moment your business stops losing money and is poised to start making it. Knowing this number is one of the most useful things a small business owner can do: it tells you the minimum you must sell to survive, and it turns vague pricing debates into concrete targets. This calculator finds that point from three inputs: fixed costs, price per unit, and variable cost per unit.
Break-even units = Fixed costs ÷ Contribution margin per unit
Break-even revenue = Break-even units × Price
The key idea is contribution margin: the slice of each sale left over after paying that unit's variable cost. If you sell an item for $50 and it costs $30 in materials and direct labor to produce, each sale contributes $20 toward your fixed costs. Divide your fixed costs by that $20 and you learn how many units it takes to cover them. With $10,000 in fixed costs, that is 500 units, or $25,000 in revenue. Sell fewer and you post a loss; sell more and every extra unit's $20 contribution becomes profit.
Why fixed and variable costs are split
Fixed costs — rent, insurance, salaried staff, software — stay roughly the same no matter how much you sell. Variable costs — materials, packaging, per-unit shipping, sales commissions — rise and fall with volume. Break-even analysis works because it isolates the contribution each sale makes against the fixed base you have to cover regardless. If your variable cost per unit ever meets or exceeds your price, contribution margin is zero or negative and no volume can rescue you; the tool will flag that case because you must fix pricing or costs first.
How to use your break-even number
- Set sales targets — make the break-even quantity the floor for your monthly or launch goals.
- Test a price change — a higher price lifts contribution margin and lowers the units you need to break even.
- Evaluate new fixed costs — before signing a lease or hiring, see how many extra units it adds to break-even.
- Judge discounts — cutting price shrinks contribution margin, so you must sell more just to stay even.
Related planning tools
- Fine-tune pricing with the profit margin calculator.
- Set a starting price using the markup calculator.
- Size up launch spending with the startup cost calculator.
Frequently asked questions
How do I calculate the break-even point?
Divide your fixed costs by the contribution margin per unit, which is the selling price minus the variable cost per unit. With $10,000 in fixed costs and a $20 contribution margin, you break even at 500 units.
What is contribution margin?
Contribution margin per unit is the selling price minus the variable cost of producing one unit. It is the amount each sale contributes toward covering fixed costs and, after break-even, toward profit.
What happens if variable cost is higher than price?
If variable cost per unit meets or exceeds the price, the contribution margin is zero or negative and there is no break-even point. Every unit loses money, so you must raise the price or lower the variable cost first.
Does break-even include profit?
No. Break-even is the exact point where total revenue equals total costs and profit is zero. Selling more than the break-even quantity produces profit; selling less produces a loss.
Related calculators
This calculator is for educational and informational purposes only and does not constitute financial, accounting, or tax advice. Estimates are based on the values you enter and standard break-even math. Consult a qualified professional before making business decisions.