This break-even calculator finds the exact point where a business stops losing money: how many units you must sell — and how much revenue that is — to cover all fixed and variable costs.
How Break-Even Analysis Works
Every sale contributes something toward your fixed costs: the selling price minus the variable cost of making that unit — the contribution margin. Divide total fixed costs by that margin and you get the exact unit count where cumulative contribution finally covers the fixed pile: below it you lose money, above it every additional unit is margin-turned-profit.
Break-even units = fixed costs ÷ (price − variable cost). The pricing half of the equation lives in the Markup Calculator; both sit in our Finance Calculators collection.
Worked Example (Verified)
A small product business: $10,000 monthly fixed costs (rent, salaries, software), price $50/unit, variable cost $30/unit (materials, packaging, shipping):
- Contribution margin: $50 − $30 = $20/unit
- Break-even: $10,000 ÷ $20 = 500 units/month
- Break-even revenue: 500 × $50 = $25,000
- Unit 501 onward: $20 each to profit — sell 750 and profit is $5,000
Using the Number Like an Operator
- Sanity anchor: 500 units/month is ~17/day — is that traffic realistic? Break-even converts financial statements into daily operational targets.
- Levers ranked by sensitivity: a $5 price increase here cuts break-even to 400 units; a $5 variable-cost cut does the same; fixed costs must fall $2,500 to match. Small price moves are disproportionately powerful.
- Multiple products: use a sales-mix-weighted average margin. If the mix shifts toward low-margin items, the break-even quietly rises.
- It is a floor, not a forecast — the analysis assumes prices and costs stay constant with volume, which volume discounts and overtime eventually violate.
Related Tools
- Markup Calculator — set the price half of the equation
- Finance Calculators — the full collection
Frequently Asked Questions
What is the break-even formula?
Units = fixed costs ÷ (price per unit − variable cost per unit). Revenue = break-even units × price.
What is contribution margin?
Price minus variable cost — the amount each sale contributes to fixed costs and then profit. Here, $20 per unit, a 40% contribution margin ratio.
What if my price is below my variable cost?
There is no break-even — every unit sold deepens the loss. Raise price, cut variable cost, or discontinue the product; volume cannot rescue a negative margin.
How do I include a profit target?
Add the target profit to fixed costs in the numerator — the units result then covers both, as the calculator’s fourth card shows.
Do break-even calculations include taxes and loan payments?
Classic break-even covers operating costs. Principal repayments are not an expense in accounting terms, but many owners include them as “fixed commitments” for a cash break-even — just be consistent about which version you are using.
Is this break-even calculator free?
Yes — free, instant, no sign-up.