Break-Even Calculator

Break-even is the point where total revenue equals total costs (profit = 0). Use this calculator to find break-even units and revenue from fixed costs, price, and variable cost.

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Break-even units = Fixed costs / (Price per unit − Variable cost per unit). Break-even revenue = Fixed costs / Contribution margin ratio. At this point, total revenue equals total costs and profit is zero.

Break-even estimates assume constant price and variable cost per unit. Real businesses face price elasticity, volume discounts, and changing costs — consult an accountant or financial advisor for business planning decisions.

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By Muhammad Abdullah Rauf · Founder, EverydayTools.proUpdated 2026-06-08

What is the break-even point and how do you calculate it?

The break-even point is the sales volume at which total revenue exactly equals total costs — neither profit nor loss. Understanding it tells you the minimum you must sell before your business becomes profitable.

**The formula:**

• Contribution margin per unit = Price − Variable cost per unit

• Break-even units = Fixed costs ÷ Contribution margin

• Break-even revenue = Fixed costs ÷ Contribution margin ratio

**Example:**

• Fixed costs: $10,000/month (rent, salaries, insurance)

• Variable cost per unit: $5 (materials, packaging, shipping)

• Price per unit: $15

• Contribution margin: $15 − $5 = $10 per unit

• Break-even units: $10,000 ÷ $10 = 1,000 units/month

• Break-even revenue: 1,000 × $15 = $15,000/month

**Contribution margin ratio**: $10 ÷ $15 = 66.7% — every dollar of revenue contributes 66.7 cents toward covering fixed costs before profit.

**Safety margin**: If you currently sell 1,400 units, your safety margin is 400 units (28.6%) above break-even — the cushion before you lose money.

Quick answers

Concise answers for common searches — definitions, steps, and comparisons.

What is the break-even formula?

Break-even units = Fixed costs ÷ (Price − Variable cost per unit).

How to use Break-Even Calculator

  1. Enter fixed costs

    Fixed costs are expenses that do not change with sales volume: rent, salaries, insurance, subscription software, loan payments. Enter the total for the period you are analyzing (monthly or annual).

  2. Enter price per unit

    The selling price for one unit, service engagement, or transaction. Use average transaction value if you sell at multiple price points.

  3. Enter variable cost per unit

    Costs that increase with each unit sold: materials, packaging, shipping, payment processing fees, sales commissions. Exclude fixed overheads.

  4. Read the result

    The calculator shows break-even units, break-even revenue, contribution margin per unit, and contribution margin ratio. Optionally enter a target profit to see how many units you need to reach it.

Break-Even Calculator examples

Coffee shop break-even

Input

Fixed: $8,000/mo · Variable cost per coffee: $1.20 · Selling price: $4.50

Output

Contribution margin: $3.30 · Break-even: 2,424 cups/month = 81 cups/day

$8,000 ÷ ($4.50 − $1.20) = $8,000 ÷ $3.30 = 2,424 cups. Divided by 30 days = 81 cups/day. A cafe serving 120 cups/day has a 39-cup safety margin above break-even.

Who uses Break-Even Calculator?

Common real-world scenarios where this tool saves time.

New product launch planning

Before launching a product, calculate how many units you must sell to cover development and fixed launch costs. If the break-even volume exceeds realistic market size, rethink pricing or costs.

Pricing decisions

Model how changing your price affects break-even units. Raising price from $15 to $18 (same costs) reduces break-even units from 1,000 to 714 — less risk before profitability.

Cost reduction analysis

If you can reduce variable cost from $5 to $4, contribution margin rises from $10 to $11 — break-even drops from 1,000 to 909 units. Quantify the impact of supplier negotiations or process improvements.

Small business viability check

Freelancers and small business owners can enter their monthly fixed overhead and per-project costs to determine the minimum clients or revenue needed to cover costs.

Workflow guides

Step-by-step chains that connect related tools for common tasks.

Price a new product

Find the minimum viable price for a new offering.

  1. Identify all fixed costs for the period (monthly overhead).
  2. Calculate variable cost per unit (materials, shipping, processing).
  3. Estimate realistic monthly sales volume from market research.
  4. Enter different price points and find where break-even units fall below realistic sales volume.
  5. Select the price with the best combination of low break-even and acceptable margin.

Reference tables

Impact of pricing on break-even

Fixed costs $10,000/month, variable cost $5/unit.

Price per unitContribution marginBreak-even unitsBreak-even revenue
$10$52,000 units$20,000
$12$71,429 units$17,148
$15$101,000 units$15,000
$18$13769 units$13,842
$20$15667 units$13,340

Higher prices reduce break-even units but also affect demand — consider price elasticity.

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Frequently Asked Questions

What is the break-even formula?

Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit). The denominator (Price − Variable cost) is the contribution margin — the amount each sale contributes toward covering fixed costs. Break-even revenue = Break-even units × Price per unit.

What are fixed costs vs variable costs?

Fixed costs stay constant regardless of how much you sell: office rent, salaries, insurance, software subscriptions. Variable costs scale with each unit sold: raw materials, packaging, shipping, per-unit payment processing fees, sales commissions. Semi-variable costs (like utilities) have both components and are often simplified as one or the other for break-even analysis.

What is contribution margin?

Contribution margin (CM) = Price − Variable cost per unit. It tells you how much each sale 'contributes' to covering fixed costs before generating profit. A CM of $10 on 1,000 units = $10,000 — exactly covering $10,000 in fixed costs at break-even. Contribution margin ratio (CMR) = CM ÷ Price — useful for comparing across different price points.

Can I use break-even for a service business?

Yes — replace 'units' with service engagements, client projects, or hours billed. Fixed costs include your overhead; variable costs include time-based costs or direct expenses per project. Service businesses often have lower variable costs and higher fixed costs, meaning they have high contribution margins but need volume to break even.

What is the margin of safety?

Margin of safety = Actual/expected sales − Break-even sales. It shows how much sales can decline before you hit a loss. A margin of safety of 30% means revenue would need to fall by 30% before you lose money. Businesses with thin safety margins are vulnerable to demand downturns.

How do I calculate break-even with a profit target?

Add your target profit to fixed costs: (Fixed costs + Target profit) ÷ Contribution margin per unit = Units needed. To earn $5,000 profit with $10,000 fixed costs and $10 CM: ($10,000 + $5,000) ÷ $10 = 1,500 units.

What is the difference between break-even and profit margin?

Break-even analysis tells you when you stop losing money (profit = 0). Profit margin tells you how profitable sales are above break-even. A business can have a high contribution margin but still require many sales to cover fixed costs — or vice versa. Use both together for complete financial picture.

Privacy, accuracy, and trust

Privacy

Cost, price, and volume inputs are calculated locally in your browser—they are not uploaded to EverydayTools servers.

Real business break-even includes semi-variable costs, volume discounts, and demand elasticity. Consult a financial advisor for business planning. Financial results are estimates for planning only — not tax, legal, or investment advice. Verify with your employer, institution, or a qualified professional.

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Reviewed on 2026-06-08.

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