Break-Even Calculator

What is a break-even calculator?

A break-even calculator is a tool that tells you how many units you must sell, and how much revenue you must earn, before a product or business stops losing money and starts making a profit. It takes three inputs — your fixed costs, your price per unit, and your variable cost per unit — and returns the break-even point in both units and dollars.

At the break-even point, total revenue exactly equals total cost, so profit is zero. Sell one unit fewer and you are at a loss; sell one unit more and you are in profit. The calculator above does this instantly in your browser, but the logic is simple enough to follow by hand, which is exactly what the rest of this page walks through.

How does break-even analysis work?

Break-even rests on one idea: each sale earns a contribution margin — the slice of the price left over after covering the variable cost of that unit. That margin is what “contributes” toward paying off your fixed costs.

The core formulas are:

contribution margin = price per unit − variable cost per unit

break-even units = fixed costs ÷ contribution margin

break-even revenue = break-even units × price per unit

where:

• Fixed costs = expenses that do not change with volume — rent, salaries, insurance, software subscriptions.
• Variable cost per unit = the cost incurred for each unit you make or sell — materials, packaging, per-unit shipping, transaction fees.
• Price per unit = the amount you charge the customer per unit.

One rule is non-negotiable: the price must be greater than the variable cost. If it is not, the contribution margin is zero or negative, every sale loses money, and no volume can ever cover your fixed costs — there is no break-even point at all.

Examples

Example 1 — the standard case

Fixed costs of 10,000, a price of 40, and a variable cost of 15.

• Contribution margin = 40 − 15 = 25
• Break-even units = 10,000 ÷ 25 = 400 units
• Break-even revenue = 400 × 40 = $16,000

You must sell 400 units, generating $16,000 in revenue, just to cover all costs. Unit 401 is your first profit.

Example 2 — a thinner margin raises the bar

Same fixed costs of 10,000, but now the price is 30 and the variable cost is still 15.

• Contribution margin = 30 − 15 = 15
• Break-even units = 10,000 ÷ 15 ≈ 666.67 units (round up to 667 to fully cover costs)
• Break-even revenue ≈ 666.67 × 30 = $20,000

Cutting the price from 40 to 30 shrank the margin from 25 to 15, so the break-even volume jumped from 400 to about 667 units — a clear demonstration of why price discipline matters.

Example 3 — higher fixed costs

A price of 40 and a variable cost of 15 (margin 25, as in Example 1), but fixed costs rise to 25,000.

• Contribution margin = 40 − 15 = 25
• Break-even units = 25,000 ÷ 25 = 1,000 units
• Break-even revenue = 1,000 × 40 = $40,000

Higher fixed costs scale the break-even point in direct proportion: 2.5× the fixed costs means 2.5× the units.

Quick reference table

Each row holds the margin at 25 (price 40, variable cost 15) and varies only one input so you can see the relationship at a glance.

Fixed costs	Price	Variable cost	Contribution margin	Break-even units	Break-even revenue
10,000	40	15	25	400	$16,000
10,000	30	15	15	667 (666.67)	$20,000
25,000	40	15	25	1,000	$40,000
5,000	40	15	25	200	$8,000
10,000	40	30	10	1,000	$40,000

Notice how a higher variable cost (last row) hurts you just as much as a lower price: both squeeze the contribution margin.

Common uses

• Pricing decisions — test whether a proposed price covers costs at a realistic sales volume.
• Startup and product launches — estimate the volume needed before a new line becomes self-sustaining.
• Investment and loan cases — show lenders or investors the sales target that makes a venture viable.
• Cost control — see how a rent increase or a cheaper supplier shifts the break-even point.
• Sales targets — convert “we need to be profitable” into a concrete unit goal for the team.

Tips and common mistakes

• Keep fixed and variable costs in the right buckets. Misclassifying a fixed cost as variable (or vice versa) distorts the result more than any rounding ever will.
• Round units up. When break-even units are fractional (like 666.67), you cannot sell two-thirds of a unit, so round up to be sure costs are fully covered.
• Match the period. If fixed costs are monthly, the break-even is a monthly target; annual fixed costs give an annual target. Do not mix the two.
• Watch the price-versus-cost rule. A price at or below variable cost yields no break-even — the calculator cannot return a finite point because the contribution margin is not positive.
• Use realistic average prices. Discounts, refunds, and transaction fees lower your effective price and quietly push the break-even point higher.

Limitations and notes

This is a single-product, linear model. It assumes one price, one variable cost per unit, and fixed costs that stay constant across the whole volume range. Real businesses face volume discounts, tiered pricing, stepped fixed costs (a second shift, a bigger warehouse), and product mixes that this simple version does not capture. It also ignores taxes, financing, and the time value of money.

Treat the output as a clear baseline target rather than a guarantee — a starting point for planning that you refine with your real cost structure.

Disclaimer: This tool provides estimates for general information and education only. It is not financial or accounting advice. Confirm figures with your own records or an advisor before making business decisions.

Explore more tools in Finance, or keep modeling the numbers with the ROI calculator, the loan calculator, and the compound interest calculator.