Free Business Calculator
Break-Even Calculator
Calculate how many units you need to sell to cover your fixed and variable costs. See your break-even revenue, contribution margin, and estimated profit or loss.
Enter your business numbers
Calculate how many units you need to sell to cover your fixed and variable costs.
Examples include rent, salaries, software subscriptions, insurance, and other costs that do not change directly with sales volume.
Examples include materials, packaging, payment processing, shipping, or other costs that increase with each unit sold.
Enter an expected sales volume to estimate profit or loss.
Break-Even Results
Enter your business details
Your break-even point, contribution margin, and estimated profit or loss will appear here.
Example
Fixed costs of $10,000, a $50 selling price, and $20 variable cost per unit produce a $30 contribution margin per unit.
What is the break-even point?
The break-even point is the sales level where total revenue equals total costs. At this point, the business has neither a profit nor a loss.
Break-even analysis can help business owners understand how many units need to be sold before the business begins generating an operating profit.
Break-Even Units
Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)
Fixed costs vs. variable costs
Fixed Costs
Fixed costs generally remain relatively stable regardless of how many units you sell during a given period.
Examples: rent, base salaries, software subscriptions, insurance, and certain administrative expenses.
Variable Costs
Variable costs generally increase as the number of units sold increases.
Examples: materials, packaging, shipping, transaction fees, sales commissions, and production costs.
What is contribution margin?
Contribution margin is the amount of revenue remaining from each unit after subtracting the variable cost of that unit.
Contribution Margin per Unit
Selling Price per Unit − Variable Cost per Unit
This contribution margin is used to cover fixed costs. After fixed costs are fully covered, additional contribution margin generally contributes toward profit.
Break-even calculation example
Suppose a business has $10,000 in fixed costs, sells a product for $50, and has a variable cost of $20 per unit.
Fixed Costs: $10,000
Selling Price: $50 per unit
Variable Cost: $20 per unit
Contribution Margin: $30 per unit
Break-Even Units: approximately 334 units
Because you cannot normally sell a fraction of a physical unit, the calculated break-even quantity is typically rounded up to the next whole unit.
How pricing affects break-even
Increasing the selling price while holding variable costs constant increases contribution margin and generally reduces the number of units required to break even.
Conversely, higher variable costs reduce contribution margin and generally increase the break-even point.
When is break-even analysis useful?
New Product Pricing
Estimate how many units must be sold before a new product begins generating profit.
Cost Planning
See how changes in fixed or variable costs can affect your required sales volume.
Sales Targets
Establish a baseline sales target for covering estimated operating costs.
Scenario Analysis
Compare different prices, costs, and sales volumes before making business decisions.
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How do I calculate the break-even point?
Divide total fixed costs by the contribution margin per unit. Contribution margin per unit equals selling price minus variable cost per unit.
What does it mean to break even?
Breaking even means estimated revenue is equal to estimated costs, resulting in approximately zero profit and zero loss.
What is a contribution margin?
Contribution margin is the amount remaining from sales after subtracting variable costs. That amount can be used to cover fixed costs and, after break-even, contribute toward profit.
Why do I round break-even units up?
When products are sold only in whole units, a fractional break-even result is generally rounded up because selling fewer units would not fully cover the estimated costs.
Does this calculator include taxes?
Not automatically. If taxes or other expenses should be part of your break-even analysis, they need to be included appropriately within your fixed or variable cost assumptions.
Can I use this calculator for a service business?
Yes, if you can define an appropriate unit of service, selling price, variable cost per unit, and fixed costs. The usefulness of the estimate depends on how accurately those inputs reflect the business.
This break-even calculator provides simplified estimates for general business planning and informational purposes. Actual costs, revenue, taxes, discounts, returns, financing expenses, and other business conditions may differ from the assumptions entered.