Break-Even Point Calculator

Find how many units you must sell to cover your costs, from fixed costs, price per unit, and variable cost per unit — plus the profit at any volume.

Break-Even Point CalculatorLive

How to use this calculator

1Enter your total fixed costs — the ones that don't change with how much you sell.
2Enter the selling price and the variable cost of one unit.
3Read the number of units you must sell to break even.
4Optionally enter a target sales volume to see the profit or loss there.

How it works

Break-even analysis

contribution margin = price − variable cost (per unit)
break-even units = fixed costs ÷ contribution margin
break-even revenue = break-even units × price
profit = units × margin − fixed costs

Every unit sold contributes its price minus its own variable cost toward covering the fixed costs — this is the contribution margin. Break-even is simply the number of units whose combined contribution exactly equals the fixed costs; below it you lose money, above it every extra unit is pure profit at the margin rate. The whole of break-even analysis hangs on separating costs into fixed (unchanging with volume) and variable (per unit), which is the first discipline of costing a business.

Worked example

With $12,000 of fixed costs, a $40 price, and a $16 variable cost, each unit contributes $24. Break-even is 12,000 ÷ 24 = 500 units, or $20,000 in revenue. Sell 600 units and profit is 600 × $24 − $12,000 = $2,400.

Break-Even Point Calculator: the complete guide

Fixed and variable costs

The whole analysis depends on splitting costs into two kinds. Fixed costs stay the same no matter how much you sell — rent, salaries, insurance, equipment. Variable costs occur per unit sold — materials, packaging, payment-processing fees, shipping. The distinction is the foundation of break-even, because it separates the costs you must cover before profiting from the costs each sale brings with it.

Some costs are mixed and need splitting. A utility bill has a standing charge (fixed) plus usage (variable); a salesperson on a base salary plus commission is part of each. Getting this classification roughly right matters more than precision — misfiling a large variable cost as fixed, or vice versa, throws off the break-even point substantially.

Contribution margin is the number to watch

The contribution margin — price minus variable cost per unit — is the amount each sale contributes toward fixed costs and, eventually, profit. It is more informative than the headline price, because a high price with high variable costs can contribute less than a modest price with low ones. Break-even is just fixed costs divided by this margin, so a larger margin means a lower break-even and faster profits.

This is why improving the margin is so powerful. Raising the price or cutting the per-unit cost, even slightly, lowers the number of units you must sell before you profit and increases the profit on every unit beyond it. A business with thin margins has to sell enormous volume to break even, which is why margin, not revenue, is the number experienced operators fixate on.

What break-even can and can't tell you

Break-even answers a specific, valuable question: how much must I sell before I stop losing money? It is the first sanity check on any product or business plan — if the break-even volume is more than you could plausibly sell, the plan is broken before it starts. It also frames pricing decisions and shows how sensitive profit is to volume.

But it is a snapshot with strong assumptions: fixed costs stay fixed, and price and variable cost per unit hold constant as volume changes. Reality is lumpier — scaling up eventually forces a bigger space or another hire (a step in fixed costs), and bulk buying may lower variable costs while discounting may lower the price. Use break-even to set a target and test feasibility, then revisit it as the real numbers come in rather than treating the single figure as a guaranteed forecast.

Frequently asked questions

How do I calculate the break-even point?

Divide your fixed costs by the contribution margin per unit (price minus variable cost). With $12,000 fixed costs and a $24 margin, you break even at 500 units. Below that you make a loss; above it, each unit adds $24 of profit.

What is contribution margin?

The selling price of a unit minus its variable cost — the amount each sale contributes toward covering fixed costs and then generating profit. A higher contribution margin means a lower break-even point and more profit per unit sold.

What is the difference between fixed and variable costs?

Fixed costs don't change with sales volume — rent, salaries, insurance. Variable costs occur per unit sold — materials, packaging, per-sale fees. Break-even analysis depends on classifying every cost as one or the other, splitting mixed costs where necessary.

What if my variable cost is higher than my price?

Then you lose money on every sale and can never break even — selling more only increases the loss. The calculator flags this. The fix is to raise the price or cut the variable cost until each unit contributes something toward fixed costs.